Contested elections and taxes: The rocky road ahead for Kenya

Casino Review - Kenyan gambling industry tax hike kenya
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In the wake of one annulled election followed by a rerun widely boycotted for fear of farce Kenya has now seen the main opposition party declared a criminal group, and its leader appointing himself as unofficial leader of the nation.

 

Alone this would prove a difficult market environment for operators to work in, but those in the industry have additionally been hit with a universally panned tax rate and are subject to allegedly illegal gaming machine seizures. It is a gross understatement to define the operational environment as a challenging one.

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Many gaming operators, primarily within the betting industry are withdrawing their custom from the beleaguered nation in response to the detrimental 35 percent tax structure brought into play in 2017.

However, a coalition of industry stakeholders working with the Association of Gaming Operators of Kenya (AGOK) have stated willingness to enter into a hopefully fruitful dialogue with the government with a view to reduce the gross gaming income tax rate.

AGOK secretary, Judith Kiragu commented at a group press conference that if central powers refused to converse and remain immovable on its fiscal plans it would only lead to issues within the nation.

“The 35 per cent increase will lead to mushrooming of illegal gambling. This will force some of us to close down, relocate to foreign markets such as Tanzania where taxation is low or scale down operations.”

It has been revealed that in late January the association met with senior officials from the Ministry of Sports, Culture and Arts, but to date no decision about how to progress in regards to the issue was reached.

Kiragu did however reveal that the body are pushing for a return to a tiered tax structure, with limits resting between five and 15 percent across the gaming sectors, or a more reasonable, and feasible flat rate if so required.

Before the most recent tax limit was introduced as a single rate across all sectors, lottery was taxed five percent, sports betting 7.5 percent, and casinos paid 12 percent.

Kiragu stated further belief that far from acting as a deterrent against problem gambling the imposed tax rate may well result in Kenyan gaming patrons being more open to exploitative practices.

She highlighted that as a result of the increased overheads betting firms may be forced to relocate operations to more fertile markets such as South Africa and Rwanda, potentially leaving a service shortfall that could be filled by unregulated out-of-country internet operations.

As is quickly becoming a trend across the continent it is reported that the AGOK also petitioned the government to increase its regulation procedures over betting machines that are often situated outside of formal gaming locations.

At present the Kenyan government is embarking on a far-reaching crackdown on what it perceives to be illegal slot gaming practices, but is doing so in breach of a direct High Court order according to independent Kenyan lawyer, Muhoho Gichimu.

Police together with officials from the Betting Control and Licensing Board have been conducting crackdowns and seizing betting slot machines since an order from interior cabinet secretary Fred Matiang’i order on January 13, 2018.

Gichimu argues however that such isincontraventionofan order issued by High Court Justice John Mativo on 28 December 2017.

“Justice Mativo issued a conservatory order of injunction restraining the respondents who included the Inspector General of Police, Director of Public Prosecution, Betting Board and Council of Governors from conducting a crackdown on business premises of slot machines,” commented Gichimu.

“The respondents were also restrained from confiscating betting and gambling machines. Therefore the ongoing clampdown is illegal,” he added.

Other African countries with strong gaming markets such as Ghana and South Africa are in the process of bringing their slot machine markets under a singular monitoring system to ensure legal practices are being carried out, whereas the current Kenyan crackdown is targeting players as much as proprietors.

A key economic institution of one of the fastest growing gaming markets in the world these seemingly thoughtless legislative movements risk holding the market back at a time when neighbours are striving ahead.

Whilst social responsibility is not to be taken lightly it must be tackled in a reasoned, rational way, especially at a time when standing still on the African continent is tantamount to economic regression.


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