How gaming industry’s steep rise ended in screeching halt

The betting sector swept Kenya like a whirlwind in the five years to 2019, before it came to a crashing halt under the weight of a clampdown from the Interior ministry.

There appears to be a comeback by some of the old players who bolted out. Their comeback will however not be without formidable competition since betway another major player who had left is already back and facilitating betting already and also other newscomers incuding 22bet have recruited many players who were previously on the departed big boys.Further another major challenger betsafe has come into the market and launching soon. Betsafe is the firm that signed spornsorship deals with both AFC Leopards and Gor Mahia.

By the time the sector was muted, punters were wagering more than Sh30 billion ($300 million) per month.

According to a leaked spreadsheet seen by the Nation, in May last year, shortly before the government introduced tougher regulations and higher taxes, gamblers staked nearly 180 million individual bets in a single month.

Extrapolating from the monthly figure, punters were on track to spend more than Sh360 billion on betting annually had the government not stopped the party.

This amount is Sh257 billion more than what the national government allocated to health in 2019/2020.

It’s also more than the Sh327 billion used to build the Standard Gauge Railway line from Mombasa to Nairobi and buy locomotives and coaches. It is also more than the Sh310 billion allocated to counties as shareable revenue last year.

One of the shining stars in the sector was SportPesa, which was a roaring success since it set up shop in Kenya in 2014. The firm accounted for almost two-thirds (64 per cent) of market share by the time it closed shop.

This put it at the top of nearly 40 betting and lottery companies that declared monthly bets totalling nearly Sh20 billion.

Its annual revenues crossed the Sh100 billion mark in under five years, spurred by the revolutionary mobile money network that allowed anyone to place a bet from wherever they were as long as they had a mobile phone.

Its success was the envy of the betting industry in the region, as it came at a time when the country was ready-to-take on the gambling craze.

The firm would quickly step forward to the international stage after it announced a Sh1.3 billion sponsorship deal with Everton FC.

It was the biggest deal in the club’s sponsorship history. The company would also set up a global headquarters in Liverpool.

Before it shot to global fame, SportPesa had entered smaller deals with Arsenal, Southampton and Hull City football clubs and the Spanish La Liga and Italian teams.

The firm has, however, chosen to keep its ownership structure, which includes Bulgarians and several Kenyans, who were at the centre of attention as the government cracked the whip on betting firms, under wraps.

SportPesa has connections with other companies incorporated in the UK and the Isle of Man, a tax haven favoured by sports betting firms.

But behind the firm is a group of foreign billionaires who struck gold in Kenya. Among them is Guerassim Nikolov, a Bulgarian, who is one of the three largest shareholders.

The other shareholders are Gene Grand and Asenath Wacera Maina, the widow of former Nairobi mayor Dickson Wathika. She has successfully kept a low profile.

Mr Paul Wanderi Ndung’u, a billionaire, is another shareholder. Mr Ndung’u, who built his fortune as a Safaricom distributor, has been the firm’s board chairman.

He was chairman of Friends of the Jubilee Foundation technical committee that raised billions for the party in the run-up to the 2017 election.

Other shareholders are Mr Ronald Karauri, the CEO. He owns a seven per cent stake in the firm. Mr Karauri is a former Kenya Airways pilot. Rival firm Betin came in second, with declared bets of almost Sh6 billion — nearly 20 per cent of all market share.

Betika, the third biggest betting firm by declared bets in May last year (Sh1.45 billion), has retained its licence throughout the turbulent months and is now thought to be Kenya’s biggest betting company. According to the data, Betpawa (since closed) and Sportybet (still operational) completed the top five.

Betpawa argued in Parliament that its director, Nikolai Barnwell, had a valid investor permit and was included in the deportation list — which had 17 foreign directors of betting firms in Kenya — erroneously.

Betika appears to be the only firm in the former top five that was not majority-owned by foreign investors.

It is owned by Beverly Technologies Ltd, whose directors are John Michemi Muthuro and Sophia Nyarora Gichuhi. The company is not linked on the online company registry search.

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