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Was SportPesa The Problem Or The Victim? by Sumaya Hussein

todaySeptember 16, 2022 31 2 5

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Sportpesa remains to be the most popular gaming brand in Kenya with a customer base of about 12 million gamblers.

Since its inception in 2014, customers have placed bets of almost Ksh450 billion through Sportpesa.

Pevans East Africa Limited, commonly known as ‘Sportpesa’, quickly became Africa’s top sports betting site and sponsors of the Kenya Premier League.

A few years after seamless operations and immense success, the SportPesa name started to go down the drain in 2017.

The Gambling Disease

After gaining immense popularity, a number of side effects began to manifest among SportPesa customers, the majority of them being youth. This brought the company to the attention of the government, which proposed a tax increase on betting firms.

The reason that was purported by government officials including former President Uhuru Kenyatta and his Interior Cabinet Secretary Fred Matiang’i, was that gambling had become a disease that was seriously affecting youth in Kenya.

In different interviews with international and local media, CS Matiang’i would be quoted saying how several Kenyans were already blacklisted by the Credit Reference Bureau (CRB) because of gambling.

Young Kenyans would acquire loans from different providers to feed their gambling addiction, and later fail to pay.

Moreover, CS Matiang’i added that youth in Kenya commit suicide after incurring betting losses.

He also mentioned that President Kenyatta was on several occasions confronted by religious leaders about the implications of gambling on society.

To curb the menace, the government increased taxes on the gaming industry, from 7.5% to a whopping 35% in 2017, which was later reverted to 7.5% in 2020.

Was SportPesa the Victim?

Insider details emerged on July 30, 2022, when businessman Paul Ngugi addressed a letter to former president Uhuru Kenyatta, stating the illegalities that caused the fall of the company.

In the letter, Mr. Ngugi, a businessman and former chairman of the company, bitterly described the trials and tribulations that the company went through, stating that the tax increase was meant to ‘punish’ SportPesa.

“On the commencement of business from February 2014, Sportpesa revenue and profits grew very fast and by 2017 was the second most popular brand in Kenya after Safaricom,” wrote Ndungu.

Ngugi described himself as Kenyatta’s friend stating that he knew Mr. Kenyatta personally since 2009 when he was the minister of finance.

He also disclosed that he joined Kenyatta’s Jubilee party as the chairman and organized funds for the 2013 and 2017 general elections, where Mr. Kenyatta vied for President.

“We also built the company Pevans East Africa Limited to be among the top five most profitable companies in Kenya for 2017 and 2018. You took note and would occasionally call me to commend me or sometimes warn me to stop taking funds out of the country for sponsorship of foreign football clubs,” said Ndugu addressing Mr. Kenyatta.

Being an initial investor and one of the shareholders of the company, Ngugi expressed the bitter demise that left him and his partners in a financial crisis.

The SportPesa brand name was taken over by a different company named Milestone Games Limited, which Ngugi said was owned by James Muigai, a close relative and friend to Mr. Kenyatta.

Other shareholders were locked out of the company and foreign owners from Bulgaria, China, Spain, Turkey, and Italy were deported.

Milestone took over all its assets and left the billions of shillings that the Kenya Revenue Authority (KRA) demanded from SportPesa.

“Immediately the license was canceled, the Bulgarian Directors of Sportpesa were deported from Kenya. Subsequently, more tax demands on Sportpesa were made which in addition to the initial Ksh 19 billion, KRA demanded a further Ksh 95 billion arising out of more than Ksh 30 billion sent offshore by the company between 2017 and 2019,” said Ndungu in his letter.

Milestone Games Limited officially entered the betting business in October 2020, using the SportPesa trade name. The two shareholders of Pevans, Paul Ndungu, and Asenath Maina were left out of the ownership.

The two maintained that the brand was illegally transferred from Pevans.

Milestone was awarded a license to operate under the SportPesa trademark in the 2022/23 financial year, following numerous court battles against the Betting Control and Licensing Board. (BCLB)

Ngugi termed the entire process as ‘state capture’ and called on Mr. Kenyatta to reverse the takeover of the SportPesa assets and trade name.

Since then, there has been no official response from Mr. Kenyatta to the 41-page letter that was also sent to other government officials and Kenyatta’s close family, friends, cabinet secretaries, and the then Chief of staff in a bid to reach him.

This article was written by Sumaya Hussein

Written by: 254 Radio

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