Out, down but not alone: Agony as SportPesa fires over 400 staff

SportPesa staff team follow proceeding during a meeting with the firm’s management. All the staff have been rendered jobless after the firm halted its operations in the country following a tax standoff with the government. [Courtesy]

From the face of it, it could just be over 400 people being sent home by betting Company SportPesa after they halted their operations in Kenya following regulation impasse with the State, but more awaits as the ripple effect begins to bite.

During a meeting to relay the sad news to the staff yesterday, the firm’s chief executive Ronald Karauri said it is tough but there was nothing he could do to save the situation.

“It is sad to summon you here to tell you that you have lost your jobs, but that is the only message I can pass at this time. It appears this journey cannot continue. I’m disappointed,” a dejected Karauri told his now-would-be ex-staff.

“We wish to notify you that your employment contract will be terminated with effect from November 3, 2019. This letter serves to give you a one month’s notice as provided for in Clause 19 of the employment contract,” read the termination notice seen by Standard Digital.

“…you be required to successfully hand over all company property including but not limited to equipment, electronic, documentation and any other instrument given to you or developed or traded on behalf of the company for clearance from the organisation,” it read further.

Notice of termination by SportPesa to its employees. [Courtesy]

The crackdown that was seen as a way of taming the ballooning betting craze, which started early this year, has come back to bite the very Kenyans that supported the idea.

Speaking to Standard Digital on phone, economist Duncan Otieno has warned that if the Government does not rescind its hardline stance, it will be the loser in the long run.

He said that apart from creating jobs and their the social responsibility activities, the betting firms by 2016 remitted Sh160 billion in taxes to the State.

“It will be simplistic from the side of the government to wish away a sector that injects Sh160 billion into the economy and creates jobs,” Otieno said.

With an economy that creates very few jobs if any, Otieno said it would be cheaper for the Government to deal with a betting population than a jobless population.

“People say there are social ills such as laziness among the youth who have turned into betting, but which one is better? A betting population or a jobless one?” he poses.

On the 20 per cent new taxes charged on individual gamblers’ winnings and annual business taxes levied on sports betting companies, Otieno says it is untainable as it will end up reducing betting firms into charity organisations.

“With the craze spreading in the country, it was good to streamline the sector, but not to the extent of people losing jobs when the government is not creating none for its people.”

The dispute between SportPesa and the government has been on for three months now ever since the government withdrew licences of 15 betting firms it claimed were not paying taxes as required.

Things crystalised from the mist for Kenyans in late September when SportPesa and gaming firm Betin announced that they had lost the tax dispute war and had opted to throw in the towel.

SportPesa announced that that they were forced to stop operations in Kenya in the wake of a tax dispute with the government.

“It is not possible to operate under the new tax rules. This has become a hostile business environment,” the company said in a statement.

Also affected

Also affected are the sponsorship deals it had signed with football entities including Gor Mahia, AFC Leopards, Kenyan Premier League and Football Kenya Federation running into hundreds of millions of shillings.

Gor Mahia’s preparation for CAF matches were hit by SportPesa’s withdrawal leading to the club's poor show and eventually being relegated to the less lucrative Confederations Cup.

Due to lack of funds, Gor lost home and away to Algeria’s giant USM Algiers.

Speaking to Game Yetu last week, Gor Mahia CEO Lordvick Aduda said the club is really struggling and was not even how they will survive in the next few weeks.

“We are at our very lowest moment because we lack funds. We owe players Sh10 million as two-month salaries, we also need money to prepare for our matches," he said.

Another lot that have been driven out of business is the cyber café operators who have started to feel the pinch.

Speaking to Standard on phone, Wycliffe Aol who runs a cyber in Pipeline estate, says things are bleak, and that they are soon closing shop.

Aol said they relied on gamblers who thronged theirs cafes daily to place their bets, but the business has gone down.

“We can no longer pay our rents, we are struggling as a result of the clampdown on betting firms, if something is not done soon families are going to break,” he said.