SportPesa Loses Kenyan Licence
Questions have been raised about the online gambling platform SportPesa after its licence was suspended due to concerns about non-compliance with regulations. Despite the suspension, the High Court of Kenya has issued an order to allow the platform to continue to operate uninterrupted until the matter is resolved. All pay bills and other services remain operational.
The operator was founded in Nairobi by a partnership of Kenyans and Bulgarian investors. With huge amounts of financial backing, SportPesa took advantage of an online gambling craze in Kenya. It grew rapidly and now dominates online gambling in the country after the explosion of mobile technology there in 2014.
There is little regulation for online gambling in Kenya, and no welfare or research comparable to that in the UK. Problem gambling is a serious issue and it has been found that young people in Kenya are gambling and losing far more money than elsewhere in Sub-Saharan Africa. In fact, Kenya has the highest number of betting youth in Sub-Saharan Africa with 76% of youths admitting that they have participated in gambling. The next highest country was Uganda with 57%. Kenya’s Interior Minister, Fred Matiang’i, proposed new regulations in May after revealing that $2billion were gambled in Kenya every year, mostly by low earners.
There have been some concerns raised about the founders of SportPesa in the past as well. The company’s founder and largest Bulgarian shareholder is Guerassin Nikolov. In 2006, the Bulgarian media claimed that Nikolov left the country after being questioned by police in relation to a criminal incident. A SportPesa spokesperson stated to The Guardian when questioned on the matter: “Mr Nikolov vehemently denies the allegations contained within the stories you have highlighted to us and we strongly urge you to treat any claims – most of which are made in personal blogs and by anonymous sources – with extreme scepticism. Mr Nikolov has non-operating interests in casinos. Mr Nikolov has passed the know-your-client checks of regulators in several jurisdictions including some of the most rigorous authorities around the world.”
Questions have also arisen around the largest Kenyan shareholder, Asenath Wacera. She is the widow of the late mayor of Nairobi and a long-term friend of the President of Kenya, Uhuru Kenyatta. In June 2017, the president reversed a pledge for a 35% tax on gambling to fund sports, arts, and healthcare. Instead, he introduced a 15% rate. SportPesa had relentlessly lobbied against the 35% tax but no comment has been made by Kenyatta’s office on whether or not this had an impact on his decision.
SportPesa in the UK
With its license being revoked in the very country it is based, SportPesa’s presence in the UK market is also under scrutiny. Since 2016, SportPesa has become a more recognisable name in the UK when it began sponsoring Premier League football clubs. It currently has partnerships with Hull City, Arsenal, Southampton, and Everton. Since then, its name has been associated with rugby, horseracing, and Formula One as well. In March 2017, SportPesa also registered its UK company, SportPesa Global Holdings.
SportPesa makes use of the white label system in the UK. This is entirely legal, but it means that the company does not require a license from the UK Gambling Commission. Browsing SportPesa’s UK website, small print at the bottom reads: “SportPesa is powered by TGP Europe Ltd of … Douglas, Isle of Man. TGP Europe Ltd is licensed and regulated by the Gambling Commission of Great Britain for provision of services to the United Kingdom.”
This means that TGP Europe provides the gambling operations for SportPesa in the UK, so money from Brits gambling with the operator is paid to TGP Europe in the Isle of Man. Companies registered in the Isle of Man do not pay UK tax and are not obliged to publish financial accounts.
This structure is permitted by the UK government but has been criticised as these companies are not required to contribute to GambleAware, the UK industry-funded organisation which provides welfare and education to problem gamblers. GambleAware’s 2018-19 list of donors shows that TGP Europe only contributed £100. A spokesperson from SportPesa said: “We share your concerns about this and raised the issue with TGP directly. As a result, they have now agreed to increase their annual contribution to GambleAware to £10,000.”
When questioned about whether or not the company pays UK tax on its UK revenues, SportPesa said: “We are a socially responsible business that puts tremendous emphasis on grassroots sport and community development. We are fully compliant with all UK and international legal requirements and, as a company that operates in highly regulated markets, we take our responsibilities extremely seriously.”
SportPesa is the main sponsor of Everton football team and its name can be seen all over Goodison Park. The club has recently been in Kenya, where SportPesa is based, for a pre-season tour, and they promote the “Kits for Africa” initiative with a donation bin in the club shop. Denise Barrett-Baxendale, Chief Executive for the football club, spoke of the partnership: “We value our developing relationship with SportPesa, who have demonstrated a strong alignment with our values.”
Campaign groups such as Gambling With Lives have criticised Everton for aligning itself so strongly with gambling. Such groups are particularly apprehensive about operators where brands are linked offshore, and finances are not made public. A spokesperson at Everton stated: “As with all our partnership agreements, a due diligence process was carried out both by the club and external advisers. Through this, we obtained the assurances we needed in order to proceed with a partnership with SportPesa.”