Kenya's two biggest football clubs have said that the imposition of a 20% withholding tax on sports betting would make much of Kenyan football "unsustainable" and could jeopardize the long-term future of the Kenyan Football League.
In a joint statement, the chairmen of Gor Mahia and AFC Leopards condemned the tax, which should be introduced as part of the 2021/2022 budget of the National Assembly of Kenya.
“The passage of this law will result in the fact that all clubs that are currently supported and sponsored by various bookmakers cannot continue to operate,” the club chairmen wrote.
The Kenya Finance Act 2021 amends the country's Excise Act to include a tax of 20% on bids made.
The tax was first included in the 2019/2020 budget but was later repealed by a parliamentary vote in June 2020 after sports betting operators including SportPesa and Betin left the country in protest.
However, reports in July suggested that the Kenyan government would look to reintroduce the tax by the end of 2020.
The Kenyan government and the country's sports betting operators have fought each other several times over the past two years, starting with the suspension of a government-led operator's licenses in a dispute over unpaid taxes.
This dispute has now expanded to pit the Kenyan Premier League (KPI), which has benefited greatly from sports betting sponsorship, with more than 1.6 billion shillings (8. 5 million pounds sterling).
“Sponsorship supports the work of clubs and allegedly the football league itself and contributes to the development of players and clubs,” write the clubs.
“This is true for other sports that enjoy similar sponsorship. After a season without fans due to the Covid-19 pandemic, our clubs have been heavily dependent on the support of our sponsoring partners.
“We are not yet out of the woods with an unpredictable future and no predictable return to the full stage,” the chairs added.
Gor Mahia and AFC Leopards have a long history of sponsorship deals with sportsbooks, starting with SportPesa, which also sponsored KPL. However, the firm canceled those deals in June 2019, citing "tremendous pressure" from the Kenyan government.
A year later, the clubs agreed to a three-year sponsorship deal with the Betsson Group as part of the operator's market expansion through its Betsafe brand.
In an impassioned appeal to the government of Kenya, clubs highlighted the "extremely difficult" financial times they have experienced during the pandemic, suggesting that the 20% tax will force sponsors to abandon previous agreements with clubs.
"This will certainly be an own goal in Kenyan football as it will derail, if not force, the suspension of the second half of the season," the clubs wrote.
“It will also have a negative impact on the highly anticipated 2022 season, which was to mark a grand restart of our full-fledged top class football in Kenya.
“This is not the first time that an excise tax has been proposed for passage into law, and the wisdom that prevailed in suspending the law earlier, given the projected impact on the sports sector, should prevail again,” the clubs concluded. .