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SportPesa inks deal to bankroll local clubs

karauri

SportPesa chief executive Ronald Karauri. FILE PHOTO | NMG

Sports betting firm SportPesa has signed a Sh682 million sponsorship deal with local football clubs and associations a few days after the Treasury published proposed changes to the tax law that could see gaming tax fall from 35 per cent of revenue to 15 per cent.

The sponsorship deal will see SportPesa pump up to Sh295 million into Kenya Premier League (KPL) and another Sh69 million into Football Kenya Federation (FKF). Kenya’s two leading football clubs Gor Mahia and AFC Leopards will get Sh198 million and Sh156 respectively over a period of three years.

“We have signed a three-year sponsorship contract with the Football Kenya Federation, Kenya Premier League, Gor Mahia and AFC Leopards,” SportPesa chief executive Ronald Karauri said at a press briefing.

SportPesa in January stopped a Sh600 million sports sponsorship deal following the imposition of the 35 per cent gaming tax on its revenues.

The firm had argued that the higher tax rate was in breach of Article 201 of the Constitution, which demands that the public finance system promote an equitable society where the tax burden is shared fairly.

It, however, promised to return to sports sponsorship if the taxes are reviewed.

The Treasury last week submitted a Bill to Parliament that seeks to amend the tax law and cut the gaming tax from 35 per cent of the revenue to 15 per cent.

READ: Betting tax cut by more than half to 15 per cent

The proposed lower tax rate also seeks to cut the share of the sales meant for social causes from 25 per cent of sales to at least five per cent, offering further relief to gaming firms.

“We have not renewed some contracts we had before such as our partnership with the Kenya Rugby Union but we decided to revive a few of the sponsorships we had because taxation has changed. We have picked partnerships we are sure we can support for the next three years so long as the taxation regime remains as proposed,” said Mr Karauri.

Besides the 35 per cent tax on revenue, which is higher compared to other African countries such as Uganda (20 Per cent), Rwanda (13 per cent) and South Africa (9.6 per cent), betting firms pay 30 per cent corporate tax and dedicate 25 per cent of their sales to social causes like sports sponsorship as a legal requirement before taking care of winnings and other operating expenses.

Lotteries are taxed at five per cent of their sales, betting firms at 7.5 per cent, casinos at 12 per cent and competitions like raffles at 15 per cent besides other taxes and levies.
The high tax rates saw Pambazuka National Lottery close down in January, barely 18 months after it launched.