Economy

Telcos win big with nod on pay by phone gambling

gambling

A man makes bets using a gambling mobile application on his phone. PHOTO | SHUTTERSTOCK

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Summary

  • The National Assembly’s Sports, Culture and Tourism committee reversed a section of the Gaming Bill, 2019 that sought to block gamblers and betting companies from paying or receiving cash through mobile money platforms.
  • The committee also wants Section 60 of the Bill amended to compel a player in an online gaming activity not to bet an amount of less than Sh100 in a competition.
  • The MPs, however, dealt banks a blow by proposing a ban on use of credit cards to place bets in an attempt to curb the problem of gambling.

Telecommunications and betting companies have won big after a committee of Parliament overturned a proposed law seeking to ban the popular mobile payments for gambling.

The National Assembly’s Sports, Culture and Tourism committee reversed a section of the Gaming Bill, 2019 that sought to block gamblers and betting companies from paying or receiving cash through mobile money platforms.

The Bill, which is now a step away from becoming law, seeks to repeal the Betting, Lotteries and Gaming Act of 1966.

The telcos and betting firms further got a boost after the legislators raised the minimum amount of an online gambling bet to Sh100 from the initial cap of Sh50—translating to bigger business.

Currently, gamblers can stake as little as Sh5 on sites like BetPawa, Elite Bet, BetYetu fueling the rapid growth of online gambling among the young and vulnerable seeking millions in prize money.

The committee wants Section 60 of the Bill amended to compel a player in an online gaming activity not to bet an amount of less than Sh100 in a competition.

“The amendment seeks to discourage gambling and to deter a licensee from allowing illegal gaming,” the committee said.

The MPs, however, dealt banks a blow by proposing a ban on use of credit cards to place bets in an attempt to curb the problem of gambling.

“The amendment seeks to remove the use of credit cards to gamble or bet…and seeks to provide for other modes of payments which a player may use, that is mobile money transfer,” the report, tabled in Parliament by committee chairman Patrick Makau, states.

The Bill now proposes that payments for gaming bets be limited to a debit card, mobile money transfer or any other method approved by the board of the yet to be established Gaming Authority.

The proposal to ban use of credit cards for gambling mirrors a similar decision by the UK’s Gambling Commission earlier this year on grounds that credit card gambling placed many people at risk of significant financial harm because it encouraged them to spend money they did not have.

Credit cards remain a major cash cow for banks due to the huge revenues realised from high interest charges.

The committee’s decision to reinstate mobile payments for gambling is, however, likely to upset lobbyists who argued that the convenience of such payments led many youths into the blacklists of lenders after failing to repay loans borrowed to finance their gambling habits.

According to a recent report by surveying platform Geopoll, Kenya has the highest proportion of youth engaged in betting in Africa at 76 percent. They spend an average of Sh5,000 per month, mostly on football bets.

Mobile payments are highly convenient, making them the preferred avenue for addictive habits such as gambling. A majority or 62 percent of Kenyans own mobile phones—indicating massive opportunities for online businesses.

A new report by Airtel Africa shows Kenya’s unique mobile penetration is the highest in the region, ahead of Zambia (54 percent), Tanzania (49 percent), Nigeria (45 percent), Uganda (42 percent), and the Democratic Republic of Congo (39 percent).

The Communications Authority of Kenya (CA) placed the country’s mobile uptake at 114.8 percent in the quarter ended December 2019, including multiple SIM cards.

In addition to revenues from mobile payments by gamblers, the telcos have reaped big from their broadband businesses, with reports indicating that millions of youth frequently visit online gambling sites.

For example, data by consultancy firm, PricewaterhouseCoopers (PwC) showed Kenyans are paying billions of shillings to access the Internet, with most of the data bundles consumed on gambling, streaming music and videos, playing video games and networking with friends.

Kenyans spent 269 million gigabytes (GBs) of data in 2019 and consumption is projected to rise to 984 million GBs in 2022.

The PwC findings put Internet advertising revenue at $38 million (Sh3.8 billion) per year, indicating advertisers’ increasing battle for eyeballs.