Kenya Premier league giants Gor Mahia FC have pleaded with the government to reconsider the “hefty betting tax” regulations that have threatened the exit of commanding sport betting firms from the local market.
The club’s Chairman Ambrose Rachier confirmed over the weekend that SportPesa, their lead sponsor have offered an official communication of their intent to withdraw their sponsorship.
Betting firms are set to cough more taxes from January 2018 after the High Court last week dismissed a case where they challenged new regulations passed by parliament to control gambling.
Justice John Mativo ruled that there was nothing unlawful about the new Finance Act (2017) which increased betting tax to 35 percent.
“I find no basis to declare the new tax guidelines for betting firms as unconstitutional. The new regulations were passed to discourage gambling activities, not to make it expensive. Imposing a tax as a measure to deter an activity is lawful if done within the law,” ruled Mativo.
Kenyan lawmakers in May passed the new rules in public interest to deter the craze of gambling especially among the youth.
The amendments on the Betting, Lotteries and Gaming Act and the Finance Act introduced a new 12 percent gaming tax, 7.5 percent betting tax, 15 percent prize competition tax and 5 percent lottery tax.
But Rachier says the move is a big blow to nurturing of sports in the country. He said stakeholders received the news with ‘utmost regret’.
Rachier stated: “It is with utmost regret that one day to the New Year, the sports fraternity has been plunged into chaos as its key investors – gaming companies – face a bleak future in a new era of excessively high tax.”
Sportpesa is set to cease the existing funding for clubs including AFC Leopards and Nakuru AllStars. Other parties to be affected by the new development are sport allied unions and federations beginning this month.
Gor Mahia expressed its sincere worries with government’s alternative to set up a sports fund with the expected revenue rise after the regulations come into effect.
“While we are appreciative of the fact that the government wants to set up a sports fund with the increased revenue from these companies, we are wary of implementation and modalities of this fund.”
“It is for this reason that we would like to implore the government to rethink this move which will be more harmful than helpful. Gor Mahia has been through thick and thin over the years. Before sponsors came into the picture, we struggled. This is an open secret. We went from selling bread to raise funds for the club to remain operational and pay players’ salaries, to setting up mobile PayBill numbers,” Rachier said in a statement published on the club’s website.
The 2017 KPL champions further mentioned that their upcoming continental sporting tour might be affected with SPortpesa withdrawal.
“We are few weeks away from kick off of our continental matches in the 2018 CAF Champions League which starts in February. Traversing the continent to honour our fixtures is an expensive affair which Gor Mahia cannot afford on its own. These matches are a source of pride for the nation as participation in the tournament raises Kenya’s profile as a sporting nation,” Rachier explained.
The KPL champions, as well as their arch-rivals and GOtv Shield winners, AFC Leopards will take part in the Caf Champions League and Caf Confederation Cup from February and March 2018 respectively.