Developments relating to the control of gambling and gaming activities in Kenya
By DD CONSULTUS
When it comes to the gambling and gaming industry, Africa should be the next big area to focus on. This is due to its huge population (over 1.2 billion people), the high rate of internet and smartphone penetration. Kenya, alongside South Africa, Nigeria and Ghana are some of the countries where the gambling industry has really expanded in the last couple of years.
In particular, the gambling industry has been booming in Kenya in the last couple of years. The success of the gambling industry in Kenya is greatly due to the hugely successful mobile money industry in Kenya. Virtually, every adult in Kenya has a mobile money account. In fact, MPESA, the leading mobile money platform in the country, is the dominant medium of financial transactions in Kenya. This, coupled with the high rate of internet and smartphone, has led to the success of sports betting and online casinos and, to a lesser extent, land-based casinos. In fact, the growth in sports betting and online casinos has been unbelievable since 2014.
There have been concerns, however, about the implications of the rising gambling culture in the country and lack of clear-cut regulations in terms of taxation. According to a survey by Geopoll, Kenya has the highest number of youths involved in gambling and gaming activities. There have been recent developments and proposed changes relating to the control of gambling and gaming industry in the country that industry players need to keep track on, to ensure compliance or be ready for adjustments if necessary.
Regulation of gambling and gaming activities in Kenya
When it comes to gambling and gaming regulations in Africa, Kenya is at the forefront compared to other countries; its regulation framework is more organised. Gambling and gaming laws are outlined in the Betting Lotteries and Gaming Acts of 1966. The Act puts the Betting Control and Licensing Board (BCLB) in charge of all administrative duties of gaming and gambling activities both at the national and county government level. This includes 11 bingo halls, 30 casinos, one horse racing track event and 3 Sportsbooks. The BCLB is placed, in turn, under the Ministry of Interior and Coordination of National Government.
The global gambling and gaming activities are on the rise, and newer and more sophisticated forms of gambling are blooming. This has raised concerns over the legal framework of gaming and gambling in Kenya. The Betting Lotteries and Gaming Acts of 1966 has all been caught up, and there is a need for its review.
Applying for a gaming licence in Kenya, the applicant is required to get in touch with the Betting Control and Licensing Board (BCLB) and fill a special form referred to as Form 13A. Upon completion, an application fee is paid to the board to carry out an evaluation to determine the suitability of the applicant.
After realising the huge potential in the online gambling industry in terms of the revenues collected, the Kenyan government decided to impose greater taxes on players and operators alike. Corporate tax for betting companies was increased from 20% to 35%. There were a lot of backlash from operators. SportPesa, arguably the largest sports betting operator in Kenya, withdrew its sponsorship for the national football team in retaliation. On their part, players were to part with 20% of their winnings. This regulation was, however, halted by the high court in April 2019.
All in all, the overall handling of online gambling and land-based casinos in Kenya has been great. In 2019, the government invited all stakeholders to a meeting and several things were proposed as outlined below.
Proposed new developments:
The stakeholders meeting was held on 1st April 2019. The Cabinet Secretary to the Ministry of Interior and Coordination of National Government outlined several proposed measures and changes to the regulatory framework of the betting industry in the country. During the meeting, the Cabinet Secretary expressed the need for a total overhaul of the regulatory framework of the betting industry since it is inadequate. Among his major concern was the need to protect youths and the poor who are predominantly involved in gambling activities in Kenya. He insisted that online gambling and gaming has become a crisis.
The ministry announced the following proposed measures and changes:
1) The Ministry intends to come up with a gambling and gaming policy together with a Bill that will be presented to the National Assembly for consideration regarding new statutory regulation of betting activities upon completion of consultation among industry stakeholders.
2) The Cabinet Secretary announced that all gaming licences would stand suspended as from 1st July 2019 apart from those who will have complied with the law and their tax obligations as will be determined by the BCLB. The Cabinet Secretary expressed his concerns over low tax received from the sector compared to the huge revenue generated.
3) The Cabinet Secretary issued directions to the Communications Authority of Kenya and BCLB to ensure that advertisements are not repugnant to good taste or deceptive. He ordered the two bodies to review all advertisements relating to gaming and gambling activities in Kenya.
4) The Cabinet Secretary also ordered the Immigration department jointly with BCLB to document all agencies involved in gambling activities and vet all the foreign nationals involved in gaming and gambling activities.
The ministry announced that there would be another meeting later between the relevant government agencies, including The National Treasury and Communications Authority, and other industry players to collect their views on the running and operations in the gaming industry.
The cabinet Secretary reiterated the ministry’s resolve to have clean, organised and reformed gambling and gaming industry in the country.
Among his commitment, the Cabinet Secretary promised an overhaul of the regulatory framework of the gambling and gaming sector. Operators and other industry players can expect significant regulatory and administrative changes in the gaming sector. They, therefore, need to keep track of any change and ensure compliance.
It would also be very vital for industry players to take part in the sectoral consultations between the government agencies and stakeholders. Their input in the proposed legal, regulatory review process is important. It will also help them anticipate and prepare adequately for the expected changes.