Gaming company Sportpesa has announced the cancellation of all sports sponsorships with immediate effect as a result of 35% tax.
This was announced by Sportpesa CEO Ronald Karauri on Tuesday in Nairobi during a press conference.
The cancellation affects the Kenya Rugby Union and Kenya Cup side Kenya Harlequins who are both sponsored by Sportpesa.
“We regret to announce that we are terminating all sponsorships effective immediately. This affects the Football Kenya Federation, Kenya Rugby Union, Gor Mahia, Nakuru All-Stars, National Boxing league and the Super 8 league,” said Karauri.
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Betting and gaming firms suffered a major blow after the High Court dismissed their legal bid to nullify a law that will raise the tax rate on gambling.
The tax hike that imposes a tax of 35 percent of gross profits on all gambling, took effect on Monday 1st January 2018.
“If the tax was on profit, even if 50%, that would be much better,” added Karauri who said "the issue is not how much money you make. There should be fairness. The 35% is on revenue before tax because we still have to pay the other 30% as any business."
In 2016, the Kenya Rugby Union signed a five-year deal worth Ksh0.6 billion with Sportpesa. Quins further announced Sportpesa as their new sponsor.
The deal with KRU saw Kenya Sevens don Sportpesa-branded shirts. Kenya Simbas, Kenya Under 19 and Kenya Lionesses were also covered in the sponsorship.
Before Sportpesa, Kenya Sevens was sponsored by Kenya Airways.
Karauri added that Sportpesa will, however, continue operating in Kenya but for Sponsorship Karaudi said: "If the government rethinks, we would love to come back to sponsorship,"
A statement from KRU after the announcement said:
"The KRU has received with great dismay the cancellation of its partnership with SportPesa. SportPesa has been a key partner in our planning and growth and has supported our sport at every level.
The cancellation of this contract forces us to completely re-examine our structures and we immediately call upon the government to step into the breach and provide the necessary support as guided by the Sports Act.
Our 2018 calendar includes the Rugby Africa Championships for our U20s in April, Lionesses participation at the HSBC Women’s Sevens World Series in Hong Kong and as well as the Commonwealth Games, and the Women’s Africa Cup 7s in September.
Simba, our National 15s team will play in the Africa Gold Cup which in 2018 will serve as the African qualifiers for the 2019 Rugby World Cup with Rugby World Cup qualification this year while Shujaa, the National 7s team takes part in the World Series between now and May, participates in the Commonwealth Games in Australia in April as well as the Rugby 7s World Cup in San Francisco in July.
We need huge support to manage all this and will immediately seek the audience with the Cabinet Secretary of Sports to pursue this further."
More to follow