Betting has become popular in different African countries, and Kenya is one of them. Kenya has a very high internet penetration rate, and ownership of smartphones is higher than in most African countries. The industry’s growth is also due to young punters who engage more in betting activities than the older generation. Another factor contributing to the growth is M-Pesa, which enables people to top up their e-wallet accounts faster, easier and in real time. There is a low penetration of credit/debit cards in Kenya compared to western countries. M-Pesa has helped bridge the gap since it is widely available and accepted by many online bookmakers and many casinos.
While registering for any sports betting site in Kenya, one’s ID no. and telephone numbers are part of the registration process, this provides a good KYC for the businesses, since you can’t register multiple betting accounts on one platform. One ID ONE ACCOUNT
Availability of the Internet has also made punters bet on various markets e.g coin toss, first free-kick, a number of free throws, fouls committed etc this creates more options for the participant and also the gaming operators and makes betting more exciting.
The gambling industry has created new jobs and new investment opportunities. The industry in totality, casinos, lotteries, and bookmakers employ 5,000 people directly. Indirectly it employs up to 200,000. In the near future, once more operators join the industry, there will be more job opportunities.
Opportunities
A Knowledgeable market that picks and understands products quickly.
Since the emergence and advancement of the internet, people have taken time to adjust and understand technology and the online world. Having several betting platforms that have been there for years also plays a crucial role in making people more conversant with the betting industry. Therefore, even when new platforms arise, it is easier to adapt to them. This highly contributes to the industry thriving.
M-Pesa proliferation makes it easier to top up an individual’s e-wallet, make bets and withdraw via smartphone or USSD.
Betting sites have become more popular than casinos because of M-PESA. Most sports betting sites in the market use M-PESA as their mode of payment, unlike casinos which mostly prefer cash or cards. This mode of payment has made it easier for people in the city and those in rural areas to place their bets and withdraw their winnings.
Registration of more sports betting companies shows that we have yet to tap the full potential of the Kenyan market.
Over the years, new betting companies have emerged and joined the market. These companies attract more people to join the betting world, which means as the industry grows, the audience and profits will increase. More companies also mean more employment opportunities as well as a ripple effect in the economy.
More sports betting products can be set up away from the current market, which is keen on EPL, LA LIGA and BUNDESLIGA. With sufficient marketing, basketball, Formula One, UFC, and boxing can provide alternative sports betting events for punters to bet on.
The most popular sport to bet on is usually football, and most people are often keen on the major football leagues. However, many people enjoy different sports such as Basketball, Formula 1 (which has become a popular sport in recent years), UFC and Boxing. Creative marketing techniques and good funding can allow companies that include these sports to reach the potential of the existing sites focusing on football. The diversity will also engage more people, especially those not fond of football.
Challenges
Taxation is high, at 35% of gross income
The goal of engaging in betting sites is to try your luck and win cash prizes. For most citizens, it is a way to earn extra money to serve different needs. However, the taxation laws regarding gross income create an issue in the betting industry. The tax percentage on winnings has an adverse disadvantage not only to the punters but also those who own the companies.
Players’ winnings deducted are a huge percentage, which means their winnings are not at par with their expectations. This disappointment leads to fewer users for those who operate the companies meaning their profits also get affected.
Betting and Gaming Taxes:-
- current gaming tax is 15% of gross gaming revenue
- 7.5% Excise Duty on amount wagered or staked and
- 20% withholding tax. All are payable to the collector on the 20th day of the month
Legislation for sports betting and casinos has not evolved to capture the current market trends, especially with technology.
Gambling is legal in Kenya, but most regulations relate to land-based betting companies and casinos. Although online platforms are tolerated by the government, in 2019, conversations about the legal framework for the Kenyan online gambling market became a tangled web which has made it difficult for the laws to evolve.
Political Interference
Betting in Kenya has advanced over the years, although it has not been an easy journey for betting sites and casinos. The government has always been keen on regulating the industry and enforcing laws on taxation that have affected operators, preventing them from growing. Anyone who fails to comply with the rules must deal with severe consequences. This has made it difficult for the industry to advance.
Nairobi City County’s Betting, Lotteries and Gaming Act 2021 is detrimental to the business since the license to operate must be issued by the county government.
Acquiring the license from the county government is a tedious process which can take up a lot of time. The process also requires a substantial amount of money, depending on the size of the business. The license is also valid for a short period of time, meaning one has to keep renewing it constantly to keep operations running smoothly.
STATS FOR KENYA
In the 2021/2022 financial year, licensed operators per industry were as follows:
- PUBLIC LOTTERIES – 19
- BOOKMAKERS – 106
- CASINOS – 33
These numbers will most likely drop in the 2022/2023 financial year. This is due to the following reasons
Government Policies
Government policies have become unfavourable for new betting companies to enter the market. The high taxation on the industry and the customer’s winnings might discourage the operators from joining the industry as it is today.
Political Climate
Kenya just concluded its general elections, which also affects the industry. The elections took up a lot of funds, and new taxation laws might need to be enforced for the economy to get back on track. These laws may end up being higher than the ones set before.
Check out this article on how technology has grown the betting industry – Technology And The Gambling Industry
Nate Kariuki
Nate Kariuki offers consultancy services for businesses looking to set up their sports betting, casinos, and lotteries in Kenya, both local and foreign. He also ensures that the business/company complies with the betting laws in Kenya. In addition, his services include license acquisition for new entrants, compliance with the regulator, advisory for the acquisition of sports betting companies, and liaising with the legislature and various parliamentary committees such as ICT and PAC. Nate has a good rapport with the regulator and key committees in the legislature. This ensures that as the operator, you will always be well informed on any new elements of operating in Kenya. He also provides sufficient industry knowledge on operating in Kenya, from the telcos to the common mwananchi, making it easier to do business. You can check out his website here.
Find out more about Nate here – Man Around Town: Nate Kariuki
