In Summary
  • The High Court last Thursday dismissed a suit by SportPesa and Pambazuka national lottery, seeking to stop implementation of a 35 per cent tax on all gambling revenues.
  • SportPesa reckons that the higher tax rate is in breach of Article 201 of the Constitution, which demands the public finance system promotes an equitable society where the tax burden shall be shared fairly.

SportPesa has issued a notice to appeal against a High Court judgment that failed to overturn the imposition of a higher tax rate on gambling, with the betting firm citing unfair tax burden.

The High Court last Thursday dismissed a suit by SportPesa and Pambazuka national lottery, seeking to stop implementation of a 35 per cent tax on all gambling revenues.

In the notice, the firm wants to overturn the ruling by Justice John Mativo, who argued there was no evidence to show the higher tax is punitive and that it was imposed as a deterrent to gambling.

SportPesa reckons that the higher tax rate is in breach of Article 201 of the Constitution, which demands the public finance system promotes an equitable society where the tax burden shall be shared fairly.

Besides the 35 per cent tax on revenues, betting firms pay 30 per cent corporate tax and dedicate 25 per cent of their sales to social causes like sports sponsorship as a legal requirement before taking care of winnings and other operating expenses.

“This means that a further 35 per cent tax would impose an aggregate 90 per cent tax burden on betting industry players,” says SportPesa.

“This is unfair, inequitable and discriminative, thus is illegal for contravening the Constitution. For lotteries, the total deductions come to more than 100 per cent because 50 per cent is paid out as prizes and not counting costs."

Until Sunday, lotteries were taxed at five per cent of their sales, betting firms - bookmakers - at 7.5 per cent, casino gambling at 12 per cent and competitions like raffles at 15 per cent besides other taxes and levies.

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