Kenya introduced a 10% tax on sports betting stakes in its 2019-2020 national budget, which was met with quite a lot of opposition by politicians rather than the sportsbooks themselves.
The reason why it was the politicians that did most of the talking was that they couldn’t see the betting tax as a viable solution. In most cases, those who opposed the new law mentioned that it’s not going to ease problem gambling in the country, in fact, it’s going to make it much worse.
We’ve seen such introductions all over the world which forced the companies to dish out 10% on each of the stakes they got through their customers. In order to combat this issue, almost every licensed sportsbook increased their minimum betting requirements, thus making the customers bet even more, while the numbers didn’t decrease at all.
This is the same issue that Kenya could start facing very soon, especially after additional crackdown laws were implemented. Things such as the 30% stake possession of local companies in foreign operators, cases with due tax in the hundreds of millions and overall loss of profitability in the industry.
Many fear that Kenya is well on its way to make the same mistake as Uganda, which is banning these sportsbooks completely. Here’s why that would be a terrible decision.
If it’s too expensive you look for a cheaper option
It’s pretty obvious that when there’s a product or a service that’s not essential but still is in demand, people will find alternatives for it if it’s too expensive. Having to “pay” 10% extra on a bet they won’t be getting 10% extra from is already a bad deal in the eyes of the problem gamblers in the country.
So what are they going to do? They’re going to place bets on unregistered online sportsbooks, or they’re going to go out and find illegal bookies to work with. We all know from reports now that most of the illegal sports betting happens on University campuses where bookies gather students and offer them this platform for “making money”.
Here’s the issue that a ban or additional tax will not solve. The demand for money, and the interest in “getting rich quick” is prevalent in young students, and will always be prevalent, therefore, getting rid of “legal” methods of getting rich quick introduced “illegal” methods to do so.
The demand is quite easy to notice. The fact that promotions similar to these Australian online casino free spins promotions are starting to gain traction in Kenya, means that people want more accessibility to gambling operators.
Maximum betting caps and promotions should be allowed
This is not an issue that only Kenya has had to deal with. It’s been a problem pretty much everywhere in the world where gambling wasn’t banned from the start. Most of these countries had several methods to somehow regulate it.
Instead of the additional taxes to put the players at a disadvantage, they simply tasked the operators to have “manageable sized deposits” as maximum what a customer can spend. That’s why we see some operators refuse anything above $50 or $100 nowadays, it’s there to not only keep the company profitable but not “milk” the customers too much that it becomes a problem.
The implementation of such laws and the transition of customers to these more “user-friendly” platforms can be done through various promotions that are not allowed in Kenya now.
Thankfully though, there are multiple examples of how to handle it. Promotions that are focused on building customer loyalty by providing free services spring to mind. Through these services the players can generate some “income” and base their gambling experience on that, meaning that no deposit is required.
Not only do these promotions help to drive the sentiment of the gambling population to licensed and trustworthy companies, but it also helps them stay at an advantage in terms of finances. They have a cap at which they can deposit, thus limiting their gambling potential, plus they get some free options which simply doesn’t require them to spend anything.
All of this culminates into a much more healthy gambling environment, meaning that the customers become more familiar with risk management, while the company stays profitable and pays its due tax.