Before its forced exit, this gaming giant was banking over Sh400 million daily–what a four star beach hotel makes annually
By Idris ‘Shoes’ Lule
President Uhuru Kenyatta’s relatives are betting to hit Mega Jackpots if their sudden foray into gambling is any yardstick. They are following in the footsteps of former President Mwai Kibaki, whose son Jimmy Kibaki, is a significant shareholder at Odibets.
The Kenyattas don’t want to miss out on Kenya’s betting bonanza. Just consider that before its forced exit from the market, SportPesa was banking over Sh400 million in daily bets. Mohammed Hersi, chair of Kenya Tourism Federation, says that daily bread “is the annual turnover of a 120 room, four star beach resort.”
Court filings by SportPesa reveal that the betting behemoth was raking in Sh150 billion in gross profits annually-half of all the sports betting money in Kenya, according to Betting Control and Licensing Board (BCLB.
SportPesa was thus bigger than Equity bank-Kenya’s second largest-in turnover terms and second to Safaricom’s Sh250 billion in annual revenues. Never mind SportPesa has two other subsidiaries in the UK, one of which made Sh6 billion in annual profits-with SportPesa as its biggest client!
Interior CS Fred Matiang’i hissed that ‘no country has been built by gambling’
Just last year, tough talking Interior CS, Fred Matiang’i hissed that sports betting was an addiction that needed taming since “no country has been built by gambling.” Garissa Town MP Aden Duale piped that betting “was a threat to national security.”
Shortly, stringent regulatory bottlenecks and doubling betting taxes to 20 percent led to tax tussles with SportPesa being slapped with a Sh15 billion bill by the Almighty Caesar at the Kenya Revenue Authority. This saw the exit of the big boys BetIn and SportPesa-which had12 million customers.
But even after SportPesa’s exit, over Sh29 billion was left in its coffers, but which has since been reported missing. Some aggrieved shareholders are threatening court petitions to trace the dough said to have been salted in foreign accounts.
Enter Uhuru Kenyatta’s relatives-with an eye on eye-watering gambling dividends-and betting ceased being a ‘threat to national security’
Enter Uhuru Kenyatta’s relatives-with an eye on eye-watering betting dividends-and gambling ceased being a “threat to national security.” It was no longer “endangering the future of our children” as Matiang’i had feared.
Peter Kihanya, Uhuru’s cousin by September 2019 had gradually acquired a one percent stake in Pevans East Africa which runs SportPesa and a 0.5 percent share in SportPesa Global which controls betting markets in Europe and Tanzania according to corporate filings in Kenya, UK and the Isle of Man as unearthed by Finance Uncovered. Kihanya also bought a three percent stake in SportPesa Holdings (Isle of Man) which receives betting revenue from UK operations.
Half of SportPesa annual profits could pay 10, 000 employees earning Sh50, 000 a month for 25 years!
Of interest is that SportPesa had been spiriting billions of shillings to SPS Sportsoft, its sister company in the UK. In 2017 for instance, SPS billed SportPesa Sh6 billion for “IT and services,” according to Finance Uncovered.
That Sh6 billion would not be subjected to Kenya’s 30 percent corporate tax and would instead earn SportPesa shareholders extra billions as UK corporate tax stands at 19 percent.
If SportPesa made Sh10 billion after tax profit, Peter Kihanya’s one percent translates to Sh100 million
Let us do the math: If SportPesa in Kenya makes Sh10 billion after tax profit, Kihanya’s one percent translates to Sh100 million. It was after Kihanya’s entry in SportPesa that the Jubilee government removed the suffocating tax which led to its exit.
When local media exposed Kihanya’s stake in SportPesa and the reason the taxes were being relaxed, the uproar of how Uhuru’s relatives were using his presidency to feather their nests, saw him back peddling in September but that the issue would be revisited by Parliament after six months.
Safaricom lost Sh240 million for monthly bets placed via M-Pesa
A year went by and then this November, Captain Ronald Karauri, CEO of Pevans East Africa-where he holds a seven percent stake- announced the return of SportPesa through Milestone Games Ltd.
But the euphoria it created was short lived. BCLB clarified that SportPesa was owned by Pevans whose license was revoked with a pending court case to boot. Milestone could only use ‘Milestone bet’, little known and without critical mass of gamblers!