Pambazuka National Lottery has suspended its operations in Kenya, hardly 18 months after it launched in the country.
The move raises stakes in the push by gambling firms for a review of the 35 per cent tax levy.
The firm said the high tax regime has forced it to cease operations after the January 7 (yesterday) draw “until a sustainable regulatory framework is put in place for the lottery industry.”
“The effect of the 35 per cent tax on all ticket sales is that the total cost of operations rises to 115 per cent and this is before deduction of operations costs,” the firm said in a statement.
“Operating any lottery under this framework is not possible and therefore business operations are forced to close,” the firm said, adding that that all the prize claims after yesterday’s draw will be paid out to winners directly or from the company offices up to April 7, 2018.
The move comes hardly one week after gaming firm SportPesa suspended a Sh600 million local sports sponsorship deal with local football clubs, rugby and boxing clubs, citing imposition of the 35 per cent tax from January 1.
The High Court had in late December dismissed a suit by SportPesa and Pambazuka, which sought to stop implementation of the new tax regime.
Justice John Mativo ruled that the firms had failed to provide evidence in support of their claims that a higher tax regime would be punitive and act as a deterrent to gambling.
Kenya’s multi-billion shilling gambling industry is made up of sports betting operators, casinos and poker rooms. Before the new tax was introduced, lottery firms were taxed at five per cent of their sales, betting firms at 7.5 per cent, casino gambling at 12 per cent and competitions like raffles at 15 per cent besides other taxes and levies.
Besides the controversial 35 per cent tax on revenues, betting firms still have to pay 30 per cent corporate tax and dedicate 25 per cent of their sales to social causes.
Pambauzuka said prior to January 1, its operations were been based on 55 per cent payout and the imposition of a 25 per cent devoted to charity as per regulations.
The lottery was set up in July 2016 as a Kenyan national lottery operated by operated by Bradley Kenya.