Sportpesa withdraw sponsorship

Business News

SportPesa have ended all local sports sponsorship following the implementation of the 35 percent taxation by the government.

While making the announcement on Tuesday in Nairobi, SportPesa CEO Ronald Karauri said they had to relinquish the sponsorship so as to stay afloat and continue operating in Kenya.

Karauri said that the pullout is immediately effective and that they have written to all sports teams and federation that they support, noting that they will save Sh600m annually from that.

“Unfortunately, we lost the case and effective immediately and we regret this decision, we have no choice but to cancel all sponsorships we have as SportPesa,” Karauri announced confirming fears that have been circulating since Thursday when the court ruled against the firm.

“This tax is on revenue before we pay the other tax, SportPesa we are here to stay and we will try to be efficient and unfortunately, we have to drop sponsorships,” Karauri emphasised.

The development will immediately affect football giants Gor Mahia and AFC Leopards who are set to represent the country at the CAF Champions League and Confederations Cup respectively.

The clubs had threatened that they will pull out of the competition due to financial constraints.

Other sports to be affected by the sponsorship withdrawal are Kenyan Premier League, Kenya Rugby Union with the Kenya Sevens the biggest losers as well as the Kenya Simbas, Kenya Harlequin, Football Kenya Federation and Boxing Association of Kenya.

Betting companies had earlier moved to court with the aim of stopping the betting tax increase from 15 to 35 percent, but Judge John Mativo ruled against their favour late December.

“I find and hold that the new taxes do not infringe on the petitioners’ rights to property since they are aimed at serving a legitimate public interest. The legislation was legally enacted and it overrides the legitimate expectations of the betting firms,” Mativo ordered.

Karauri welcomed the Government proposal of establishing a Sports Lottery to fund federations, teams and individual athletes but said it would not be enough to cater for the industry’s needs.

“The lottery has changed sports in the UK, but at the end of the day, if you do not have a private sector to support it cannot work. The private sector and Government have a role to play and we need to come together,” the SportPesa CEO remarked.

Karauri who is also the Association of Gaming Operators in Kenya, called on President Uhuru Kenyatta to initiate dialogue to resolve the standoff pledging SportPesa would make a swift return to sports if an amicable solution is found.

“No one has called me to come and talk, request the President to sit down with me as the chairman of the AGOK so that we come to a solution.  I remain optimistic but our attempts at dialogue have not been fruitful.

“We will appeal the case since it was grounded on equity and fairness in taxation. You can only be optimistic for so long, we cannot shoulder the burden and keep our employees and business running. We will be very limited in what we can do,” the CEO noted.