The resilient sports betting companies

Like every other economic significant activity, sportsbook throughout the world have borne the brunt of Covid-19. Some have seen their fortunes improved due to the affluence of regular gamblers deprived from attending casinos and bingo halls on account of health-related shutdowns.  Others have seen their clientele shrink on account of the impact of unemployment and the reduction of economic activity. But on the balance, these seem to be great times for all types of gambling as there could be a positive correlation between economic instability and gambling as a last rescue resort.  

Two companies in the sports betting space are all set to profit from these developments. They are in quite distant geographies. But share in the spirit of entrepreneurship that has awarded the favorite tag in their respective markets. They are SportPesa and 5Dimes. Both have encounters with regulators, and both are bouncing back to success.

For SportPesa the confrontation with the Kenyan government started when its shareholders from Kenya, Bulgaria and the USA, decided to withdraw from the market because of a stringent new tax that wanted to tax gambling gross receipts by 20% instead of taxing operators’ winnings. The company shut down operations in October 2019 sending 450 plus workers to unemployment. But the company also decided to fight a legal battle against the tax authorities suing them at the Tax Appeal Tribunal. Soon several other operators joined including its competitor Betin. 

Operators won the case, as the court decided that taxation should only apply to winnings not to overall gross revenue.  But there was yet another legal battle to fight. 

The gambling regulator in Kenya, the Betting Control and Licensing Board, suspended SportPesas license in July 2019 arguing a tax debt. 

This time SportPesa seemed to have run out of luck as the High Court of Nairobi ruled in favor of the regulator. After settling the tax account SportPesa is getting ready to reenter the market. According to its leadership, the company continues to draw the greatest chunk of the local sports betting market. It also is banking on the industrywide goodwill that it earned in its fight to define the tax base.  According to SportPesa’s CEO Captain Ronald Karauri, the company is excited to be back in Kenya and looks forward to working with the regulator. Quoted by Nairobi News he remarked: “As market leaders, SportPesa will focus on upholding the highest standards of service and responsible gaming. We look forward to working closely with BCLB and all other stakeholders”

This optimistic vision was shattered a day after reinitiating operations when the regulator halted SportPesa’s operations on account of trademark infringement. And while the issue seems to have been resolved the event came as a sharp reminder that the regulator has not taken the court defeat lightly and will keep the company on magnifying glass supervision mode. 

In Costa Rica, the legendary sports bettor 5Dimes reached a settlement with the US Department of Justice agreeing to pay US $ 46.8 million.  As part of the settlement, 5Dimes agreed to stop servicing U.S. customers out of Costa Rica. The U.S. Attorney’s Office for the Eastern District of Pennsylvania brokered the settlement. 

On the 5Dimes side the agreement was promoted and brought to closure by Laura Varela, the widow of the company founder, the late William Sean Creighton. Laura Varela took the 5Dimes helm after Creighton, best known as 5Dimes Tony, was kidnapped in September 2018 and was found dead a year later.

Ms. Varela brought to 5Dimes a 21st century vision which entails not only building on its tradition to serve bettors effectively and efficiently offering them the most attractive and lucrative betting options and punctually paying wins but she decided to rely on a team of women to head the diverse company departments. She modernized procedures, established rigorous compliance controls, and led the settlement with US authorities that had charged her late husband and 5Dimes with violations to the Unlawful Internet Gambling Enforcement Act. 

Ms. Varela will lead 5Dimes reentry into the US market with superb management procedures and hope to spread the brand appeal to capitalize on the growing US sports betting market. 

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