Mastering the African betting realm?– financial considerations

In a recent panel discussion featuring Oliver De bono, CEO of Quantum Gaming, Arnold Karanja, partner at Mwenje and Karranja Advocates, and John Kamau, founder of Betconsult Africa, the focus was on betting big and understanding the nuances of financial planning as operators and platform providers enter the African market.?

Financial Planning Considerations:

The panelists emphasized the importance of strategic financial planning, particularly in diverse African markets with varying jurisdictions. Just like European markets, Africa’s GEOs exhibit different approaches to taxation, VAT, and regulatory fees. Oliver De bono, a legal expert with experience in multiple African countries, highlighted two critical considerations for operators:

• License Acquisition vs. Company Acquisition: Operators must decide whether to obtain a license in a specific territory or acquire an existing company. Due diligence is essential, and timelines for financial planning may differ based on the chosen approach.
• Tax Advisory: Engaging a reliable tax advisor is crucial to navigating the complex landscape of taxes, including excise, withholding tax, corporate tax, and gaming tax on Gross Gaming Revenue (GGR). Mistakes in tax registration can lead to unexpected financial obligations.

John Kamau added insights on market selection, recommending operators choose countries with stable regulations, good internet and mobile penetration, and favorable payment models.

Gaming Taxes in Kenya:

The panel delved into specific examples from Kenya, shedding light on the gaming tax structure. In Kenya, gaming tax is set at 15% of GGR, with additional withholding tax on winnings. The challenge arises when certain taxes, like withholding tax and exercise tax on Pankas (platforms), are imposed on customers, potentially favoring illegal gambling sites that avoid these taxes.

Learning from International Markets:

The panelists highlighted the importance of learning from international market experiences to avoid pitfalls. They commended Kenya for maintaining reasonable license fees, acknowledging the negative impact excessive fees could have on the industry and operators.

Licence Costs in Kenya:

Licenec costs in Kenya were discussed, revealing that a bookmaker license may have government fees around 10,000, but the overall cost could be five to six times higher. Casino licenses, on the other hand, may have government fees around 80,000, with the total cost potentially doubling. The panelists recommended engaging local experts and considering the acquisition of existing companies with due diligence.

As the African betting industry evolves, operators and platform providers must navigate complex financial and regulatory landscapes. Insights from experienced professionals underscore the importance of strategic financial planning, tax advisory, and learning from both local and international market experiences. Operators looking to enter the African market should prioritize due diligence, engage local expertise, and adapt their strategies based on the specific challenges and opportunities presented by each jurisdiction.