A recent article reported that Kenyans are spending over Sh160 billion on betting annually according to data acquired from Mpesa.
According to the report, this was alarming and calls for stringent regulations such as an increase in taxation to the gaming companies and even revocation of operating licenses.
It’s important to clarify that, the Sh160 Billion above is just the deposits by the punters and it doesn’t necessarily mean a profit to the gaming companies. Why not compare the figures to the annual payouts by the companies to winners for instance 70-80 per cent of this amount goes out as payments to winners and in taxes which is astronomically high in Kenya and unreasonable compared to other global markets.
Gaming companies in Kenya are subjected to a very high taxes and this has been pushing them out of business. 7.5 per cent excise tax, 20 per cent withholding tax on net winnings, 15 per cent gaming tax and 30 per cent corporate tax.
All these are far too much and above what happens in ideal markets. They also have other normal bills such as salaries, premise bills and other overhead costs to take care of and that dimples the income even further.
This is perhaps an area the incoming leaders need to think about and work hand in hand with the gaming firms to rationalize operations for the benefit of everyone.
They remit taxes worth over Sh1.5 billion monthly to both local and National governments and this is an area that has hugely been ignored when reporting on matters gaming companies. These are monies that are used to develop sports and other sectors of the economy.
The gaming companies are also hugely involved in Corporate Social Responsibility (CSR) and this was very evident at the onset of the Covid-19 pandemic.
Majority of sporting organisations are also directly sponsored by gaming companies. They are an important contributor to the economy through the creation of jobs, continued capital expansion and the payment of taxes to the national government.
The gaming industry has provided significant funds for financing government organisations and other associations aimed at improving the socio-economic and social status of persons with disabilities, vulnerable groups, and other persons in need of social assistance, social welfare institutions, sports, local self-government, and the treatment of rare diseases.
The gaming companies have extensive corporate social responsibility (CSR) programmes, embracing issues as diverse as responsible gambling, education, environment, health and well-being and social inclusion.
Achieving growth in the economy requires the creation of a business-friendly environment in order to improve the country’s competitiveness through structural reforms, market liberalization and foreign capital inflows for investment.
Therefore, fiscal policy should support growth by establishing a stable internationally competitive and socially fair tax system. The media has an important role to play in all these and it all begins with fair reporting.
The media should be fair in their reportage of the gaming companies. This is an industry just like any other and they are legally doing business. The gains to the economy from the gaming industry are massive and deserve to be covered as well.