Kenyan football is on the verge of total collapse following the announcement by two betting firms, SportPesa and Betin Kenya, that they are closing shop.
The decision confirmed by the pair on Saturday, after the prolonged push and pull with the taxman, is a big blow to local football and is set to hit Kenya hard.
The betting firms, which control more than 60 percent of the market share in Kenya, said separately that they had resorted to taking the action after the taxes slapped on the industry made the business no longer viable.
SportPesa, which had earlier indicated their intentions to come back to the business, said it was disappointed with the decision by the Kenyan legislature to impose a 20 percent excise tax on all betting stakes, therefore affecting their profitability.
“SportPesa is disappointed with the decision by the Kenyan legislature to impose a 20% excise tax on all betting stakes,” stated the statement from the betting firm obtained by Goal. “The tax is based on a fundamental misunderstanding by the treasury of how revenue generation works in the bookmaker industry.
“Until such time that adequate taxation and non-hostile regulatory environment is returned, the SportPesa brand will halt operations in Kenya.
“This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya.”
For their part, Betin sent a notice of termination to all its staff on grounds it has not been operational since July 2019.
“Management has had several extensive meetings with relevant government entities regarding the company’s licence renewal without much success,” the firm explains in the staff memo, as seen by Goal.
“In a view of the above, we have had financial constraints as you might all expect. As a result of the deterioration of the profitability, the management has had to rethink its operational model and to proceed with the exercise of termination on account of redundancy.
“We hereby notify you positions will be rendered redundant on 31st October 2019.”
It is no doubt that local football has been sustained by betting companies, which have given millions of shillings over the last few years.
The two clubs have not paid their players for two consecutive months, and the situation is about to get out of hand unless something drastic happens.
Gor Mahia chairman Ambrose Rachier has termed the decision by SportPesa to exit the big stage as a huge blow which could force them to wind up the club.
“There is still no solution as at now as the SportPesa sponsorship is still off. The club owes two months and three months’ salaries to the players and technical bench respectively,” Rachier told Goal. “We simply don’t know where to run to, we need sponsors because managing this club is becoming a huge task as days pass by.”
AFC Leopards chairman Dan Shikanda could not hide his disappointment.
“We are facing tough times ahead,” Shikanda told Goal. “To be honest, some of our new signings are yet to receive their sign-on fees because we were hoping SportPesa will return to sort the same.
“We will now have to rely on well-wishers and the fans to manage the club, it is not easy and I know we will face many tough hurdles ahead. Ingwe was depending 100% on SportPesa funding. We simply don’t know where we will go from here.”
Apart from the two clubs, the Kenyan Premier League are also without a title sponsor and will be unable to pay referees, not to mention further crucial logistics.
SportPesa forks out Sh250million to support the KPL for three years.
“It is back to the drawing for KPL and the league,” CEO Jack Oguda told Goal. “It is a huge blow because [SportPesa] had indicated the desire to return and support the sport but now that they have announced they are gone for good, we must get a quick solution by engaging other firms to come on board and support us.”
Without the sponsorship, it remains doubtful if KPL will be able to run the league. As it is, the majority of the clubs are already struggling even with the little that they receive from the league managers.
Tales of unpaid players and members of the technical bench will be the order of the day, further eroding the quality of the league.
Football Kenya Federation have also lost the Shield Cup sponsorship, and may be forced to scrap the tournament if no other sponsor comes on board.
FKF boss Nick Mwendwa admits the latest development will affect the day-to-day running of the game in the country.
“It is sad news for us because [SportPesa] had told us they will come back soon, but now their exit means we have lost almost Sh600m as sponsorship for local football,” Mwendwa told Goal. “We will now turn to the Kenyan government for help because we don’t have any other solution.
“We will talk to the [government] and see how good they can chip in and help us to push and manage the top leagues, which we already have.”
The Federation are certainly saddled with considerable responsibilities at the moment, which require money, and they must preserve every penny they can. The Harambee Stars will also feel the pinch, as they were beneficiaries of Sh20million from Betin as they prepared for the Afcon finals staged in Egypt.
“[Betin] came in handy and supported our national team for the Afcon finals,” Mwendwa explained to Goal. “We must now start shopping for another sponsor and I have no idea how long it will take us to get one.”
A total of Sh600million will be wiped off the country's football industry following the move by SportPesa and Betin, while the sports fund, which relies on money from betting companies, will also be affected.
The fund, which draws money from the tax imposed on betting firms, became operational this year, and its role is to help in the funding of national teams, arts, and a universal healthcare program launched by the government.
Betting firms contributed more than Sh7 billion to the fund every year, and it is not apparent how the government will compensate for the shortfall from the two biggest firms in the market walking away. Had they been serious about supporting the country's sport in the first place, this whole situation could have been avoided.