SportPesa pulls out of Kenya sponsorship deals due to new 35% tax rate

a’s leading sports betting company, SportPesa has terminated its sponsorship deals with various football clubs and the Kenyan Premier League due to the governments substantial tax increase on gaming revenue.

The Finance Bill imposing the 35% tax rate on all gambling revenue was signed into law a few days ago. The substantial increase has been highly criticised as an unfeasible sum as operators were previously working with a rate of just 7.5%.

SpotPesa Founder and CEO Ronald Karauri announced on Twitter that the company would be “giving notice to clubs and unions that from 1 January we will withdraw all sponsorships”. Karauri claimed the repercussions of the new Finance Bill would negatively affect the company’s business operations.

Speaking to local media outlets, Karauri adds: “The expected financial projection will force the closure of firms and that there’s no company in the country which has the capacity of complying with the tax. The tax bracket is not fair as some operators can barely sustain their businesses.”

SportsPesa currently sponsors two of Kenya’s biggest football teams, both Gor Mahia and AFC Leopards, in addition to the KPL and the Kenya Football Federation.

Whilst SportsPesa will be cutting all ties with Kenyan-based company’s, business will remain as usual with its foreign sponsorships, such as Everton and Hull City.

Initially, the Finance Bill had sought to tax gambling revenue at 50%, however this was amended to the 35% rate before President Uhuru Kenyatta signed it into law.

The increase was aimed at deterring minors from betting and to promote responsible gambling with the younger generations. However, Karauri states: “The Gaming Operators in Kenya are likely to stop funding and carrying out Corporate Social Responsibility projects and this will put a lot of youths out of jobs.”