Regulator’s action on betting firms exposed its ineptitude

I agree with President Kenyatta that sports betting companies must be pushed to the wall to pay all taxes. Where I disagree is the approach the Betting Control and Licensing Board (BCLB) and its parent ministry, the Office of the President, adopted in closing the operations of several of such firms in the country.

COURT ORDER

Make no mistake. I am no blind supporter of gambling and will be the first to warn against the harmful effects of addiction to gambling.

But capricious and whimsical is how I describe the way the government ordered telcos to shut down paybill numbers and short codes belonging to 27 sports betting companies.

How do you selectively close some companies while allowing others to continue running and still expect the public to believe that your actions are motivated by public interest?

It was a case of blatant discrimination by a regulator. It’s the decision’s discriminatory nature that ended up fuelling the narrative in the social media that the sports betting companies that were allowed to continue operating were favoured by the regulator because they had links to powerful individuals within the Establishment.

What we witnessed last week was a compelling study on arbitrary regulation by a weak regulator. You wake up one morning to find that the mobile telephone platform where your customers play has been closed because of orders from above.

Is it not the height of outrage that in effecting the stoppage orders, BCLB ignored the fact that these companies had existing contractual relationships, which the telcos were legally bound to honour?

Is it not the height of impunity that in the case of SportPesa, there was a court order barring its telco partner from interfering with the access of the gaming firm’s customers to their platforms?

BLACK MARKET

Well, the government is well within its rights to push sports betting companies to pay maximum taxes. But the means adopted to this end must have fairness, even-handedness and transparency. I’m for a regime where regulation is conducted in a way that it does not offend an investor’s rights to private property and personal freedoms.

While the big sports betting firms should not operate as if they are above the law, it is equally true that as long as the 2010 Constitution is in force, every investor, and every Kenyan who chooses to engage in sports betting, is above State terrorism.

In leaps and bounds

The government should realise that the approach it is taking in pushing sports betting companies into paying maximum taxes might, in the long run, end up being counterproductive.

With increased access to smartphones and satellite TV to members of the public, sports betting is likely to still grow in leaps and bounds. When you put gambling beyond the reach of the millions of people who own smartphones, as the government did last week, the risk is that you will have pushed millions of individuals out of the formal market into the unregulated black market where taxes are not collected.

When Uganda banned sports betting early this year, they witnessed the emergence of a booming parallel market characterised by the mushrooming of unregulated betting kiosks and shops in nearly every corner of Kampala who do not pay tax. Officials realised later that they did not have the capacity for even rudimentary monitoring of the informal gambling market.

The biggest problem in Kenya is that regulation of sports betting is not evidence-based. How else would one explain the basis of the widely held myth that the sports betting industry in Kenya is worth Sh200 billion?

FLYING BLIND

Just pick up the audited accounts of any of any four market leaders and you will discover that the figure is a gross exaggeration. Which is a pity because the assault on the companies is based on that erroneous notion.

And who came up with the Sh200 billion? Who conducted the study? Can the evidence on which that is based be made public?

The scientific data should not be difficult to get. With the seamless integration of mobile money and betting platforms, digging up accurate data on the financial operations of the firms is not a big deal. Corroborative data from different platforms can be gleaned from their paybills and wallets.

Making assumptions in the absence of a strong evidential base cannot count for good policymaking. We must take regulation of gambling to the next level and to a regime where decisions are based on regularly collected gambling statistics giving out information about consumer behaviour, the frequency with which they gamble and scientifically gathered data on social issues such as addiction and underage gambling.

When it comes to information and policy on gambling, the government is clearly still flying blind.

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