SportPesa Suffers a Blow as Appeals Court Approves its Closure

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BCLB, Betting, SportPesa, Sahihi Bet, Safaricom Paybills, SportPesa

Pevans East Africa, the company that operated under the SportPesa gaming brand until June 2019, has lost its case in the Court of Appeal where it sought to compel the Betting Control and Licensing Board (BCLB) to renew its licence.

The appellate court on Friday upheld the decision of High Court judge John Mativo issued on August 30, 2019 to dismiss Pevans’ application that challenged the regulator’s refusal to issue it with a new licence.

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BCLB cancelled the firm’s licence on July 1, 2019, citing non-payment of withholding taxes, among other reasons.

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The company said its rights were violated since other betting firms’ licences were renewed, adding that the tax demand from the Kenya Revenue Authority (KRA) was disputed.

Court of Appeal judges Roselyn Nambuye, Hannah Okwengu and Fatuma Sichale rejected Pevans’ arguments, saying the regulator is empowered to take enforcement actions on individual firms, including asking for proof of tax payments.

“Accordingly, and in light of the above conclusions, we think we have stated enough reasons as to why this appeal is for dismissal. It is hereby dismissed with costs,” reads the judgment dated March 19, 2021.

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The KRA had initially issued a Sh15 billion tax demand on Pevans and has subsequently revised the amount upwards to Sh95 billion.

The decision by the appellate court is likely to lock out the company from the betting business indefinitely.

The firm’s founders fell out over its management and allegations of embezzlement of billions of shillings.

As Pevans was fighting in court to regain its operating licence, some of the shareholders last year acquired a newly formed company called Milestone Games Limited to which they transferred the popular SportPesa gaming brand.

It was revealed that Pevans’ chief executive Ronald Karauri and Francis Waweru Kiarie had acquired a combined 95.3 percent stake in Milestone through several investment vehicles, replacing the owners who obtained the licence from the regulator.

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The two are also shareholders of Pevans in which Mr Karauri holds a seven percent equity and Mr Kiarie has a one percent stake.

The BCLB has also moved to shut down Milestone’s operations twice on several grounds, with the company securing temporary court orders that have allowed it to continue operating.

The regulator on October 30, 2020 ordered the company to stop using the SportPesa trade name, saying it belonged to Pevans, according to its records at the time.

It was later revealed that some officials of Pevans, including Mr Karauri, had transferred the popular gaming brand to its UK-based affiliate Sportpesa Global Holdings Limited (SPGHL) which in turn assigned it to Milestone effective September 15, 2020.

The brand transfer has been disputed by businessman Paul Ndung’u, the owner of a 17 percent stake in Pevans, who says the move was not authorised by the board.

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BCLB on December 4, 2020 terminated Milestone’s licence, saying the decision was based on the entry of the new shareholders who were not vetted and authorised to complete the share transactions.

The company has also sued the regulator and telecoms operator Airtel Kenya, accusing them of contempt of court and frustrating its business.

Airtel has declined to allocate Milestone pay bill accounts and short codes previously used by Pevans, arguing that they are not transferable based on the law and regulatory edicts that have been issued.

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