Kenya’s betting industry is again on the brink of a major financial shift as lawmakers push for a staggering increase in security deposits required from online gambling companies. The proposed Gambling Control Bill 2023 mandates that firms must now deposit KES 100 million, a remarkable leap from the current requirement of just KES 250,000.

This dramatic proposal reflects growing concerns about the stability of betting firms, especially following a surge in cases where companies have failed to pay out winnings. The Betting Control and Licensing Board (BCLB) has been vocal about the need for these changes, highlighting that the existing deposit levels no longer ensure player protection. 

Peter Mbugi, the BCLB CEO, raised critical points about the need for financial security in light of the industry’s rapid growth, which has seen the number of licensed betting operators more than double in recent years. He questioned whether the previous amount could adequately cover player deposits if a company were to shut down.

In discussions around the bill, the joint committee initially considered a much higher security level of KES 200 million. However, after some debate, they settled on KES 100 million, acknowledging the potential impact of betting operations while still aiming to safeguard players’ interests. This move comes after the ban on influencers’ gambling endorsements earlier in May, as the country looks to clean up its betting market.

Consumer Protection Major Factor

The proposed increase in security deposits is designed to enhance consumer protection, particularly in the online gambling and national lottery sectors, which have a greater impact compared to traditional betting venues.

As noted in the committee report, these online platforms can potentially affect a larger portion of the population, making it essential to implement higher security deposits to safeguard consumers adequately.

The new requirement for a KES 100 million deposit will come in the form of bank guarantees. This means lenders will have to ensure they can cover the financial commitments of betting firms, including reimbursing player deposits and honoring winnings.

While this measure aims to reinforce the financial integrity of the sector, it may pose challenges for less financially stable companies, possibly driving some out of the market. Currently, there are 226 licensed betting firms, more than double the number from three years ago.

This legislative change, outlined in the Gambling Control Bill 2023, seeks to replace the outdated Betting, Lotteries and Gaming Act.

Source: iGaming Today