BY PAUL OGEMBA
On July 10, the newest lottery firm in Kenya launched its entry into the betting craze through an expensive entertainment function across seven counties.
Dubbed “It is Big”, the Pambazuka National Lottery (PNL) boasts of being East Africa’s biggest ever, national lottery with a jackpot of up to Sh100 million and mini-jackpots of Sh10 million.
The lottery was simultaneously launched in Nairobi, Kisumu, Mombasa, Meru, Nakuru, Nyeri and Kisii and broadcast live on a section of television channels, following the completion of multi-million shilling campaigns and road shows across the country.
Speaking at the event, the CEO of Bradley Kenya Mr Hussein Mohamed did not mint his words, and talked at length of how the lottery will change people’s lives through gambling where they play through gaming platforms or buying PNL tickets sold by vendors.
“The Pambazuka National Lottery will provide revenue-generating entertainment through sales of products that will generate both social and economic benefits to Kenya,” said Mohammed.
PNL’s launch and entry into the Kenyan market was the latest emerging craze of betting and gambling business in Kenya, which has been on the rise since 2013 when the first online sports betting company SportPesa was registered.
According to financial analysts, the betting industry is projected to grow by nearly Sh6 billion in the next three years, making Kenya a country of gamblers. This is reflected more in sports betting where Kenya has nearly 30 registered and licensed sports betting companies.
Betting is a risky game, which has led to lose of lives when people decide to commit suicide for losing a bet. Why then would the government allow so many betting firms to operate in the country obvious of the risks involved?
According to financial analyst David Mogere, the stressing economic times is what is making the government expose itself to these lotteries as a way of generating more income through tax.
“Betting and gambling may be good to the economy but it should worry the country when we become a gambling nation. The non-economic impacts being witnessed as a result of betting shows that something need to be done to control the betting craze,” said Mogere.
Mr Mogere added that it is little wonder that majority of advertisements now concentrate at promoting sports betting firms, from billboards to television, newspapers and posters on vehicles that promise millions of shillings with a simple text message to register on the betting platform.
Renown American economist and 1970 Nobel Laureate Paul Samuelson did not mince his words when describing the betting craze, maintaining that it was a negative influence on a country’s socio-economic agenda.
“Gambling involves simply sterile transfers of money or goods between individuals, creating no new money or goods. Although it creates no output, gambling does nevertheless absorb time and resources. When pursued beyond the limits of recreation, where the main purpose after all is to kill time, gambling subtracts from the national income,” said Samuelson.
Kenyan writer Dr Joyce Nyairo captured the spirit of betting in her book Kenya@50 by arguing that we have become a nation of gamblers in the past ten years.
According to Dr Nyairo, several casinos, promotional offers run by multi-billion shillings corporate and lotteries have dominated Kenyan media space through enticing adverts that prove to be addictive once a person starts to engage in betting.
“Gambling is very addictive. It draws one into the idea that they are being rewarded while in real sense they are being roped into the bondage of eternal betting. It becomes worse when those who get the jackpot or win some money swear to continue with the habit,” says Dr Nyairo.
According to statistics from the Betting and Control Licensing Board (BCLB), majority of registered betting firms are for sports, meaning that sports being a social activity, it is the easiest way to have people hooked to the betting game.
Leading the pack in sports betting are SportPesa, Betin, Betway, Oxygen 8 (operating as Bet Yetu), Justbet and mCHEZA. Others like Lotto entail picking lucky numbers, randomly by computer-generated draws to pick the winner.
Betting in Kenya has become so lucrative that even some government ministries have set up their own firms for lottery. In 2012, the Ministry of Youth and Sports established a Sports Lottery Fund, through which money raised from the betting industry would benefit the development of local sports.
Some economists and financial analysts however support the betting craze, and see it as a way of boosting the government economy through taxes as well as empowering those lucky to hit the jackpot.
“We have to look at the overall economic gains from betting and ask ourselves if it is adding more to our economic ability to earn more. If the answer is positive then we should not question why we have the betting craze in Kenya,” said Justus Biwot.
In the US, proponents of gambling give the example of Las Vegas city as evidence that gambling can be a powerful economic development tool. They argue that Las Vegas is a testament of the ability of gambling to foster economic development, and that due to gambling, the city had impressive job growth, developed into a major city with a low tax burden that many state and local governments look at with envy, and has spawned significant private and public sector investment.
Statistics released by PriceWaterhouseCoopers (PwC) in December 2015 indicated that the annual gross turnover of sports betting industry in Kenya is $20 million (Sh2.1 billion) and that with more competition, the gross revenue was projected to grow to more than $50 million (Sh5.1 billion) in the next three years.
However, despite the huge projections the government has not come in the open to state how much revenue they realised from the 20% withholding tax that The National Treasury imposed on winnings from betting. The law requires the players, not operators, remit part of their winnings from betting.
Since its inception, SportPesa has handed out over Sh100 million to jackpot winners, the biggest being Sh29 million won by Mr George Mwangi, a Nairobi-based businessman in September last year.
In January, 27-year-old businesswoman Elimah Khanaitsa from Kakamega County won Sh22 million in the jackpot after correctly predicting the outcome of 13 football matches. Another sports fan, Faustine Imbali Asenahabi won Sh10 million jackpot in the Betin Kenya betting game.
As well as creating millionaires, the promise of landing the betting jackpots has led to fatalities where some betting addicts could not contain the bitterness of losing their money.
During the recent European Championships in France, a university student committed suicide in Migori after losing Sh80, 000 in football bets. The Kenyatta University student was found hanging behind his mother’s house and left a suicide note indicating that he saw no sense of living after squandering the money he was given to pay fees, on betting.
In February, another man committed suicide after losing Sh45, 000 to betting. He had borrowed the money with his wife but decided to invest it in betting with hopes of winning rewards but when that failed, he decided to end his life. Another student in Kabianga University also took his life after losing Sh40, 000 of tuition fees to betting.
Former Betting Control and Licensing Board chairman Prof Paul Wambua Musili once said that gambling is a demerit good which must be regulated.
“By its very nature, gambling has many incentives that attract deceitful, dishonest and disorderly conduct from operators. Gambling is a demerit good and, as is the practice worldwide, demerit goods are subject to heavy taxation or direct control to reduce consumption because of their potential harm to the consumers and their families,” said Prof. Musili, adding that addictive substances are heavily regulated because addiction causes great harm to society, and that those addicted to gambling can lose all of their money and end up homeless, as well as drive their families and friends to bankruptcy.
The betting trend in Kenya shows that it is a free flow business being regulated by weak laws that do not warn the public against the negative impacts.
The regulatory framework for sports betting is found in the Betting, Lotteries and Gaming Act (Cap 131 Laws of Kenya), which establishes the Betting Control and Licensing Board (BCLB). BCLB is charged with licensing and regulating the gaming industry in Kenya.
