A nation of gamblers?

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BY LUKE MULUNDA

On February 6th, as Kenyans were smarting from a penniless January, the country’s biggest sports betting company SportPesa finally unveiled the winner of Sh230.7 million mega jackpot.

Mr Gordon Ogada, a Nairobi resident who lives in Kibera, was the luckiest of the millions of Kenyans who placed bets on various games on different platforms in the hopes of lifting the jackpot, which had piled over the last 10 months since another Kenyan won Sh221 million.

The two payouts alone amount to nearly half a billion shillings. If this is any guide, SportPesa is reaping a fortune from Kenyans gambling away their tiny incomes. Being private companies, SportPesa and other betting firms in Kenya such as Betway, Betin and M-Cheza do not make their earnings public, but it is obvious they are on a roll.SportPesa alone could be making hundreds of billion-shilling turn over and controlling most of the gambling money in Kenya’s Sh7.3 trillion economy. The closest rival outside betting could be Safaricom, which is by far the most profitable company in the region. 

The growing number of betting and gambling companies in Kenya has led many analysts to brand Kenya “a gambling nation”, where some have turned betting and ruffles into full time jobs. Gambling is universally spread in Kenya – from young students to even older men and women who often use earnings from milk and cereal sales to bet on teams they even don’t know.

In between the mega jackpot wins, many people walk away with mini-jackpots and small consolation prizes that keep them addicted and bait more people to join the bandwagon. Sports betting may have taken root only a few years ago but has grown markedly to become one of the leading industries in terms of contribution to revenue growth in the economy. This means it is also supporting other sectors of the economy through payment of government revenue and creation of employment.

Kenya tops in gamblers

A GeoPoll Survey released in March last year showed that Kenya tops the table of Sub-Saharan countries, with 76% of the persons interviewed engaging in betting. Kenyans are big gamers and will drive the envisioned growth within the Sh400 billion-industry. There is increased investment and marketing by industry players to ensure just about any Kenyan gets a chance to try their luck as more platforms emerge.

In fact, the government is already tapping the gambling money in a big way. Analysts project that by end of 2018, gaming related businesses will have injected up to Sh3.2 trillion into the economy. The Finance Act 2016 highlights gaming as the new tax frontier for the government with earnings that were expected to triple by 2017. Currently there are over 20 betting sites and firms in Kenya luring people. Initially, betting and gambling was a preserve of the rich in casinos but it’s now everyone’s game. Before a government crackdown on gambling machines marketed by various firms including Lotto, various shopping centres had been converted into gambling dens.Gambling is being fueled largely by the growing use of the Internet in the country, which has given access to the services to as many Kenyans as those who own smartphones. Indeed, most sports betting companies’ traffic is online, even though gambling providers still feel the cost of data is still high.The GeoPoll report reveals that most of the gamblers do so on mobile phones, where at least 96% of the bets are placed.

“Although huge investments have been made to ensure more people can easily and seamlessly access innovative, highly interactive websites to place and track their bets, the cost of mobile data stands in the way for most users especially within the lower economic cadre,” says Wanja Gikonyo, the country manager, Betway in Kenya.

“At Betway we have noticed new longer betting sessions mostly associated with concurrent match researches before placing the bet. Our responsible betting campaign supported by user infomercials online has ensured that our players spend more time online researching on games before placing the bets.”She says the high cost of mobile data in Kenya discourages players from staying online for long to conduct more game research and/or explore the vast gaming opportunities with the betting sites. 

On average each session lasts for about five minutes which translates to an estimated Sh50-200 daily and about Sh5, 000 monthly spend on mobile data alone. “Most gamers will access varied betting platforms at least once a day, to either place a bet or track ongoing matches. This in itself, and not at all associated to any winnings, is a deterrent to many regular gamers,” Ms Gikonyo says.

Bittersweet love for betting

Peter Ouya loves betting. He takes many chances and bets Sh10, 000 a week on a number of games in European leagues. By sheer luck, Ouya can recover the money that he puts and get something extra. On bad days and weeks he loses everything. “Betting is a big problem,” he says, exposing rotting front teeth due to heavy smoking and drinking. “At first, it’s all fun, but before you know, it’s an addiction.”

Ouya, a freelance driver and parking attendant in Nairobi, admits he’s a betting addict. He’s been gambling for over two years, typically four-five times a day and more on weekends. He’s registered on most platforms like Betway, BetPawa, mCheza, SportPesa, and Betin and usually places his bet on football games.

But he has learnt a truth that most people ignore: in gambling you win and lose at the same rate and most probably you will lose more than you win.

As gambling, and especially sports betting, becomes pervasive in Kenya its adverse effects continue to get acute. Researchers and social activists have warned about the compulsive nature of gambling, and lack of proper safeguards to thwart underage gambling. Currently, anyone with Internet access can open an account, with cases in the past of students who have used their school fees to bet.

The betting boom has also caught on in countries like Uganda where the expansion of satellite TV and the creation of a national lottery lured many jobless Ugandans into betting. In Nigeria, 60 million people between the ages of 18 and 40 years spend up to 2 billion naira ($6.2 million) on sports betting daily.In Kenya, which is home to the third-largest gambling market in Africa behind South Africa and Nigeria, betting is riding on smartphones and mobile digital technology, through which fans share tips.

Media companies join the bandwagon

The popularity of gambling has risen over the past few years with the advent of mobile applications to make betting easier and an increase of betting joints. In Kenya, SportPesa, which was launched in 2013, for instance, now has over one million registered players. The easy money in gambling has attracted even media companies, which have launched their own lotteries to have a piece of the pie. Royal Media Services runs Shabiki.com, which is sports betting service, while Standard Group has Lotto and Mediamax operates its own lottery of matching numbers.

But that doesn’t mean everyone is dancing. Pambazuka National Lottery (PNL), launched in 2016 by Bradley Ltd, on 7thJanuary 2018 folded up, citing punitive taxation regime. According to Pambazuka lottery management, prior to January 2018, operations had been based on a 55% payout and the imposition of a 25% tax devoted to charity as per regulations. The effect of the 35% tax on all tickets sales from 1st January, they said in the closure announcement, is that the total cost of operation rises to 115%.

“This is before the deduction of all operational costs,” the statement said. “Operating any lottery under this framework is not possible and therefore business operations are forced to close.”

Some analysts point to low take-up of tickets as the main reason, as most Kenyans prefer sports betting which has been earning millions for winners, to general ruffles.

Weak legislation

As the government rake in millions of shillings in tax revenue from the industry, critics have pointed to inadequate or obsolete regulatory frameworks to reduce exposure and solicitation of vulnerable groups.

In Kenya, the Betting Control and Licensing Board is regulated under a 1966 law, which is filled with many shortcomings even as the technology and processes around gambling have progressed. Successive laws to curb the negative impacts of the practice have either failed or are yet to come into effect.

Kenya is the leader in the most amount of money spent on gambling, according to GeoPoll. Unlike youth in other African countries, most Kenyan youth bet once a week spending about $50 (Sh5, 000) per month mostly on football bets. Youth elsewhere spend less than $50 a month and most bet only once a month.The government appears to have resorted to being punitive on gambling firms instead of tightening regulation due to the profitable nature of the betting industry. In early 2017, the government introduced a five-fold tax hike on betting in a bid to raise funds that would support sports and cultural activities. In November, it also announced a proposal to provide preferential tax treatment to betting companies who pay their customers by buying them shares in blue-chip companies or in government bonds. The move is part of the Capital Markets Authority’s plan to get more people to invest at the Nairobi Securities Exchange.

The 2014-2018 Gambling Outlook by PriceWaterhouseCoopers examined the extent of the gambling industry in South Africa, Nigeria and Kenya and estimates the business at $37 billion in these three countries. The report says most young people are using mobile phones to gamble with 75% of those who bet using their phones. Kenya has the highest usage of mobile phones for gambling at 96% while South Africa has the lowest at 48%.  In the GeoPoll survey of youth between the ages of 17-35 in sub-Saharan Africa, Kenya had the highest number of youth frequently gambling.

Geopoll notes that mobile phones have become Africa’s Las Vegas.

The lure of better things

The Digital Skills Observatory report says gambling provides participants with a false and risky sense of better days. The contention is that people know it is risky but have an impression of winning, which is often an illusion. According to Digital Skills Observatory data, more than 50% have spent more on gambling than they have gained. The average amount spent on bets is below $50 per month and majority has never won any amount above $50 (Sh5, 000).

While gambling has created employment and taken youths off the streets in some cases, it has also trapped a lot of participants in compulsive “problem gambling”, which have ended in suicides or depression. In some cases, gambling addicts have sold property only to be left in poverty.Football betting and the popularity of English football leagues continue to grow in a symbiotic way with a growing youth population that continues to be defined by its uptake of technology. Although the stakes are not yet high, all the signs are there of a steady domination of sports entertainment and gambling in sub-Saharan Africa.

According to a 1996 report by the National Council of Welfare, suicide attempts are more frequent among those who are experiencing problems related to gambling, compared to the general population.  Gambling researchers say heavy financial losses are likely to be one of the most important causes of suicides among problem gamblers.

Problem gamblers often have substance-abuse problems and other mental-health issues, but debt has been identified as the factor most likely to push them over the edge. Problem gambling cannot only be a drag on the economy but can also destabilize family structures.