Accurate gambling data is needed

It is my wish to conclude my contributions on the public conversation around sports betting in Kenya with this article. I believe I have pronounced myself audibly enough and shaped the debate.

Two weeks ago, economist David Ndii on his column on the online publication The East African Review neatly debunked the statistics that the gambling industry in Kenya makes a turnover of Sh200 billion a year using an input-output analysis.

Taking the government claims that the gambling industry makes Sh200 billion, this significant input must reflect in the gross output in the production accounts - the GDP contribution numbers of the country.

So using the 2018 national economic data, he looked at the gross output of “other service activities” where gambling would be captured and the output Sh154 billion which is less than the claimed turnover. He then moved to the gross output for “arts, recreation and entertainment” where gambling as an activity may also be captured but the output was a paltry Sh10 billion far away from Sh200 billion.

So where did the Sh200 billion go to in the national computation if it really exists? His conclusion was that the Sh200 billion gambling turnover is not just inconsistent but also missing in the national economic data.

But one other claim that was left unattended was government almost claiming that there are 12 million mobile phone-based betting accounts.

So, let’s debunk this, for one to operate a mobile phone-based betting account he/she needs internet and according to Google it only identifies 13 million active internet users in Kenya. Going by Google’s numbers, it means 92 percent of all internet users in Kenya have a mobile phone-based betting accounts which cannot be true.

Many will argue that the 12 million accounts are not individual accounts, one bettor may hold several accounts across the many betting platforms. Now, the 2019 FinAccess Survey conducted by the Kenya National Bureau of Statistics in partnership with the Central Bank of Kenya and the Financial Sector Deepening (FSD) reliably reports that in overall 1.9 percent of mobile money account use it for betting.

With Kenya having 47.6 million active mobile money accounts that translates to 900,000 mobile phone-based bettors in Kenya. So how did government arrive at the 12 million mobile phone-based betting accounts?

Accurate use of data in public policy management and administration is important because it helps in the accurate assessment of the policy problem leading to accurate policy initiatives to be applied and conducted. Unfortunately, this is one front the government has failed to live up to. Now, interesting comments came out of the last article I talked about speculative demand economic of gambling drawing parallel to stock market. So let’s use a different analogy. A rational being as defined by economists and psychologists as one with an economic behaviour of risk aversion.

For example, individuals buy insurance to reduce risk meaning they are risk averse. So if rational beings are risk averse, why are they players in the betting market and the stock market where risks are high? Even after winning a bet why does a risk averse rational being not pull out but instead continues to bet making his risk status higher?

This is inherently the demand economics of gambling and is explained by the standard economic theory that the sole motive of a gambler is to improve his/her wealth or income position.

So, as long as individuals feel that they wish to improve his/her wealth or income and they are high risk-takers, the demand for gambling will always exist. And as the economic saying goes “supply will always follow demand” as long as demand exist, the market will provide the supply whether it’s through legal or black market just like in foreign exchange trading or alcohol market. That in short describes the economics of gambling.