Kenya’s proposed new gambling bill could have a big impact on operators’ room for manoeuvre, but the sector should have seen it coming. Meanwhile in Spain a compromise over gambling advertising might emerge, writes Dominic Gates.
The Kenyan Government published a new gambling bill last week that will be debated by the National Assembly in the coming months and could have a major impact on online gaming and betting operators working in the country.
If passed it would revamp Kenya’s regulatory framework for gambling by imposing significantly higher licensing costs on operators. It would also set up a new gambling regulator to monitor operators and take charge of enforcing regulations much more closely than has been the case up to now.
It would impose further conditions such as requiring that at least 30% of gambling companies’ shareholders are Kenyan nationals. The reform is clearly aimed at foreign online operators and would make it compulsory that they establish a physical presence in the country if they want to continue operating there.
Advertising would also be subject to stricter controls. TV and radio ads would have to have 10% of their air time dedicated to responsible gaming messages and would be prohibited from 6AM and 10PM, unless during live sports broadcasts.
‘Why mention Kenya?’ you are probably wondering. On the surface the east African state’s gambling market has little in common with what is happening in the UK. In reality that isn’t the case at all. The biggest sports betting operators in Kenya are very active in the UK and by far the biggest online bookmaker there is Sportpesa. Some of you will know that Sportpesa is also highly active in the UK.
It is Everton FC’s principal shirt sponsor and prior to that was principal sponsor of Hull City, as well as being the official betting partner of Southampton FC and other football and rugby clubs in the UK. In January it also announced it had signed a two-year sponsorship deal with the Formula One team Racing Point, for which it will pay US$15m a year.
If those amounts aren’t enough to make your eyes water, it’s also worth remembering that Sportpesa only started operating in 2014 and now has around 450 employees according to Wikipedia. The sums it spends on sponsorships of all types, the Formula One deal alone comes to US$30m over two years with possible add-ons and renewals, imply that it must turn over huge amounts of money to be able to afford shelling out such sums.
However, its dominant market position and the fact that it also sponsors football teams and the football league in Kenya has led many anti-gambling activists to become highly critical of the firm, the industry and what they consider to be the outsized influence they exert on civic life in the country. This recent report by the BBC gives an idea of the tone of the coverage.
Same story, different country
The Kenyan government also recently announced that it will be overhauling its gambling and tax regulations and has demanded Sportpesa pay €120m in back taxes. And it’s not just Sportpesa that is being targeted in this way.
Online giant bookmaker Bet365 and Betway, shirt sponsor of Premier League side West Ham, have also been criticised for what some say is their unscrupulous targeting of betting customers in Africa. Meanwhile 1xbet, a Ukraine-owned online bookmaker highly active in Ghana, and others such Nairabet or 9jabet, both Nigerian-focused betting operators, have also been in the crosshairs.
All these examples are in fact fairly typical of what happens when gambling operators go after markets where there is little regulation or legal oversight of their activities. It’s a kind of ‘make hay while the sun shines’ scenario as they sign up customers with enthusiasm and a relaxed attitude shall we say to age and ID verification procedures. They grow strongly and quickly, until the mainstream media pick up on the sector and negative stories of players spending too much, getting into debt and developing addiction problems start appearing.
Throw in some unclear ownership structures and the fact that some, such as Sportpesa, are spending huge amounts of money in sponsorship, in other words the kinds of revenues that you wouldn’t think their activities in the markets where they operate would generate; and further doubt and suspicions are being cast on the sources of their income.
So the regulatory blowback the Kenyan authorities are currently putting together to address the gambling sector’s activities in their country is not surprising. Such a comment can also be made of the operators and their mode of operation in markets like Kenya. It is a scenario that we see repeated in virtually identical ways across all markets, whether it’s Kenya, Ghana, Nigeria or, closer to home, France, Germany, Spain and even the UK in the early noughties.
The MO goes something like this, in virtually all cases: operators start marketing in a certain country, enjoy significant growth with little scrutiny from the authorities for a number of years, reach such a level that it becomes impossible for them to ignore those companies’ activities, add to that some critical press stories are published and anti-gambling pressure groups joining in the criticism. The upshot, virtually always, is some kind of clampdown is enacted or restrictive regulations that help the state-owned operators are placed on the sector (following some hasty discussions that don’t really take operators’ concerns into much consideration).
The question the industry should really be asking itself is: how can we avoid these scenarios? Should we pre-empt regulatory clampdowns and approach the authorities with a view to passing regulations that are at least neutral to our interests? Is it worth being more conciliatory when we are criticised by pressure groups?
The fact that the same chain of events keeps on reoccurring is the troubling aspect of these stories.
Common sense to prevail in Spain?
When Spain’s ombudsman for citizenship called to for a total gambling advertising ban in the country the sector would have been entitled to worry about further clampdowns. The situation however has evolved, with the gambling industry lobbying to reach some middle ground where it would accept some advertising restrictions in exchange for being able to market its products at specific times.
An important aspect of mainstream advertising is its substantial revenues to publishers and consumers are protected by law when playing on licensed sites, while the government is able to recoup the tax revenues generated. Will common sense and a sense of perspective prevail in Spain? Stakeholders hope so as they endeavour to convince the legislator of these facts.