President Uhuru Kenyatta drops punitive betting tax as his cousin Peter Muiruri Kihanya acquires stake in Sportpesa

The hype of sports betting is set to make a comeback in Kenya after President Uhuru Kenyatta dropped the controversial tax on gambling that saw leading firms exit the Kenyan market last year.

On Tuesday, President Kenyatta signed the Finance Bill 2020 which dropped the 20 per cent excise duty on bets staked.

The 20 percent tax, which applied on all stakes, was cited by many betting companies that left the Kenyan market last year.

The removal of the law is expected to see a return of the betting firms, particularly Sportpesa which had the greatest market share before its exit in September 2019.

The firm had promised its customers that it would reopen operations if the controversial law was scrapped.

"This tax decision will have a damaging impact on both customers and treasury. Further compounded by the currently in-effect 20% Withholding Tax on Winnings, the economic incentive to place bets will be completely removed as the taxes will deprive consumers of their total winnings. This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya.

"Until such time that adequate taxation and non-hostile regulatory environment is returned, the Sportpesa brand will halt operations in Kenya," the company said in a statement announcing its decision to shut down the Kenyan operations.

Coincidentally, President Kenyatta's change of heart has come a few months after his cousin Peter Muiruri Kihanya joined the Sportpesa Board and has been quietly increasing his stake in the betting firm's subsidiaries.

In May 2019, as the government's relationship with Sportpesa was on the decline, Kihanya acquired a one percent stake in Pevans East Africa - the company that owns Sportpesa Kenya.

Kihanya has also joined the board of Pevans East Africa.

In November, shortly after the Kenyan operations were closed, the businessman acquired a 0.5 percent stake in Sportpesa Global Holdings - which runs Sportpesa betting sites in Tanzania, Italy, Russia, and South Africa.

The President's cousin also acquired a three percent stake in Sportpesa Holdings Limited which runs Sportpesa's operations in the United Kingdom.

Kihanya is the brother to Kathleen Kihanya - another of the Uhuru's relatives who grabbed national headlines in 2016 after a company she co-owned with Nyokabi Kenyatta was linked to controversial payments at the Ministry of Health.