SportPesa achieved a net profit of Sh12.9 billion for its owners in Kenya in its first five years of operation, indicating the rich gains in sports betting when the brand was owned by Pevans East Africa.
Pevans launched SportPesa in 2014, earning Sh44.2 million in profit. The following year, earnings increased to Sh1.6 billion, before peaking at Sh6.2 billion in 2016.
The company’s net income fell to Sh2 billion in 2017 before rising to Sh2.8 billion in 2018 – its final full year of business before losing its license due to a large tax demand from the Kenya Revenue Authority (KRA).
In a legal lawsuit filed by Asenath Wachera Maina, who wants the court to confirm Pevans as the owner of the popular SportPesa brand, the company’s performance from 2014 to 2018 has been disclosed.
In October 2020, Milestone Games, a firm founded by a group of Pevans founders, resurrected the SportPesa betting brand, which Maina accused of fraudulently transferring the trademark to the new company.
Milestone’s success is unknown to the general public, although Pevans’ historical results indicate huge profits that belie the fierce competition for the SportPesa brand.
The High Court temporarily barred Milestone from using the SportPesa brand, in which Ronald Karauri owns a controlling share.
According to Lady Justice Dorah Chepkwony’s directives, the parties will have a hearing on the matter on May 31.
Pevans earned Sh228.4 billion from the bets put over the course of five years. Over the same time period, the company spent Sh4.4 billion on marketing.
Its net margins averaged around 5.6 per cent. The KRA, on the other hand, has alleged in court that the corporation inflated its costs in order to pay less tax.
Pevans halted operations in July 2019 after its operating license was revoked due to unpaid taxes and penalties totalling Sh95 billion, according to the taxman.
In the profitable sports betting market, SportPesa is the most well-known brand.
In Kenya, the gambling platform is projected to have 12 million dedicated customers who gambled a total of Sh150 billion in 2018.
The gambling mania that has become a national hobby has benefited betting companies, the KRA, and mobile money operators whose platforms are used to fund the bets.
Lucky punters receive a portion of the value of their winning bets from sports betting businesses. In addition to income taxes on betting companies, the taxman receives a percentage of the bets.
According to Safaricom, Kenyans spent Sh169.1 billion on betting through M-Pesa in the year ending March.
The documents indicate the value of bets increased by 23.8 per cent from Sh136 billion a year ago, defying a government crackdown on gambling by imposing greater taxes on both firms and punters.
After business-to-consumer (B2C) sales of Sh11.4 billion in the year to March, betting is now the second-largest revenue-generating business line under M-commercial Pesa’s payments.
The extent of gambling in Kenya is unknown, but given the platform’s dominance in personal payments, bets funded from M-Pesa accounts are believed to account for the majority of the activity.
The Betting and Licensing Control Board (BCLB) published a list of betting enterprises licensed for the year ending June, showing that the number had climbed to 100 from 76 a year earlier, or a 31.5 per cent increase.
The government instituted a 7.5 per cent excise fee on betting stakes, which means it takes Sh7.50 out of every Sh100 wagered, regardless of winnings.
It also removes 20 per cent of earnings and imposes additional fees on betting companies in an effort to make gambling less appealing.
