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Regulator’s take on Midiwo betting Bill

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Anthony Kimani Kung’u, the Betting Control and Licensing Board chairman, during the interview in Nairobi. PHOTO | EVANS HABIL

Over the past three years, millions of Kenyans have taken up betting as the multi-billion shilling craze sweeps the country.

This has seen the mobile phone-based sports betting industry experience phenomenal growth. Lucky punters are reaping handsome rewards, which have seen huge jackpots being paid out.

Anthony Kimani Kung’u, chairman of the Betting Control and Licensing Board (BCLB), sat down with the Business Daily’s Gerald Andae to discuss the impact of the a Bill sponsored by Gem MP Jakoyo Midiwo on the gaming industry.

What is your take on the proposed law for the gaming Industry?

There is no question that the existing legislation governing betting is in dire need of alignment with the phenomenal growth of the industry.

At BCLB, in consultation with stakeholders in the industry including Interior ministry and the Attorney General’s chambers, are draft regulations that address the gap from our professional standpoint.

Therefore, I can confirm as chairman of BCLB that we were not consulted by the sponsor of the draft Bill despite being the statutorily mandated oversight authority of the betting and gaming industry. 

The Bill has far reaching legislative proposals that not only affect the industry but raise constitutional and operational concerns. It never sought input from stakeholders, including the board.

It also has shortcomings that will roll back significant gains made in the industry.

What do you think of the betting limit per person being set at Sh200?

My initial reaction is how was this amount determined or arrived at? This is one of the overreactions that litter the entire Bill.

Kenya is not a nanny State and attempting to decree what a citizen may or may not do with their money in a legal and regulated industry is going a bit too far and a constitutional violation.

As a law abiding citizen who pays my taxes, where does the government come in when it comes to my spending? We have had an upsurge in lifestyle related diseases in the past few years, does this mean that Parliament has the right to impose the maximum amount of nyama choma citizens should eat?

The Bill proposes to bar betting firms from using mobile telephone platforms and instead set up their own systems for transactions with their customers. What is your take?

It is not feasible and is yet another glaring example of the overreaction by the sponsor of the Bill.

The Bill states that it is an offence for any entity licensed under Section 79 of the Kenya Information and Communications Act to allow a licensee under the proposed Bill to use its telecommunications platform.

One must remember that licences for online gambling are sought under the same section from a separate independent regulator.  But the Bill comes back to stop this legal requirement governed by separate Acts. There is lack of harmonisation here and a good example of why consultation is urgently required.

Secondly, we are supposed to be supporting enhancements in technology, not retrogressing when it comes to delivery of services.

On increment of taxes, is this a workable proposal?

Some background is important on this issue. The Finance Act, 2016 amended the betting laws that included the introduction of new taxes in the industry and setting of the rates.

The new taxes are effective from January 1. The Bill now seeks to enhance the rates of the new taxes even before they are implemented.

The Finance Act, 2016 withdrew the withholding tax on winnings due to difficulties in collection. The Bill now proposes to re-introduce a tax on winnings without providing a mechanism that addresses the challenges that blocked implementation of the withholding tax.

The taxation does not augur well for the industry. Remember that the industry is taxed corporate tax at 30 per cent, up to 12 per cent gaming tax and dividend on top of supporting good causes.

What about the introduction of taxes on winnings?

As I have mentioned, this is taking us back to what has been tried, tested and proved a major headache to implement.

Taxing of winnings was removed two months ago after it was proven to be uncollectable in the two years it existed and replaced with individual taxes on gaming revenue. 

Let’s discuss limits. The Bill wants to limit gaming to persons aged 25 and above and amount of money someone can win. Your take?

I confirm that we have no input in this proposal and I am not convinced about its rationale. The age of majority in Kenya is 18 years at which age we allow our youth to access driving licences, rights to contract in their own capacity, ownership of property, access to alcohol and issues like marriage.

Therefore, what does this proposal seek to cure? Is it constitutional? What is the industry age entry threshold elsewhere in the world? For instance in the UK, a country that has grappled with the regulation of the gambling industry for centuries, anyone above 16 years of age is allowed to participate in lotteries.

What about the cap on winnings?

This proposal in the Bill demonstrates a clear misunderstanding of the industry and design of a lottery. 

The world over for instance, lottery winnings in the form of jackpots are progressive in that if it is not won within a set period of time it continues increasing until someone gets lucky. Last year, the whole world was watching when the Powerball jackpot in America reached 1.6 billion dollars.

Kenya’s industry is benchmarked with global practice and this is simply how it works. If winnings are capped, it will kill the lottery business as practised worldwide. This again goes to emphasise the need for expert input.

One big concern with betting is addiction. Are there any Industry regulations that require these betting companies to come up with programmes that assist addicts or even prominent messaging warning about the risks of betting?

We are in the process of formulating regulations that will require the firms to undertake public awareness programmes and already we have advised all companies to ensure that at least five per cent of their advertising space is dedicated to messages dealing with responsible gambling and protection of the underage and vulnerable members of the society.

But majority of Kenyan gamblers can best be described as “recreational gamblers”, and are able to manage their expenditure and time in a relatively responsible way. This is not to deny that there is a small category of “problem gamblers”.

The issue of underage betters, however, is one we are taking very seriously though the platforms in use like mobile money are designed such that one cannot register without a national identity card.

Given the proliferation of sports betting in the country, what measures have you put in place to ensure that these companies have the capacity to meet their payouts in total when they fall due? Do they deposit any amount with the Board?

Due diligence is undertaken before issuing any licence and financial probity is a major part of this process. They don’t deposit any money with us, but we require that they show us proof of funds in the form of bank guarantees.

How many sports betting companies are there in the country at present?

I can confirm that there are about 10 major players right now and more than 30 licence holders who are yet to get in.