SportPesa CEO Ronald Karauri.
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Betting control board places SportPesa’s fate on a bad bet
What you need to know:
- Milestone Games Ltd not in the new register of licensed public lottery companies in Kenya.
- For months now, Milestone has been trading using the SportPesa short codes.
As the multi-billion-shilling battle between shareholders of SportPesa and a new entity, Milestone Games Ltd, continues in the courts, it has now emerged that the two companies are no longer in the new register of licensed public lottery companies.
This will be a blow to Milestone Games, which had taken over some of SportPesa’s assets – including its trademark – in a deal done by one of the Bulgarian shareholders, Mr Gene Grand, without the knowledge of the Kenyan shareholders.
As of July 31, according to a letter sent to both Safaricom and Airtel, the Betting Control and Licensing Board (BCLB) had only licensed 13 companies to operate public lotteries and these include the age-old Kenya Charity Sweepstake. It has also registered 76 bookmakers and 39 casinos.
For months now, Milestone has been trading using the SportPesa short codes – and former shareholders of Pevans East Africa, which owns the SportPesa brand, claim that this was done behind their backs by the Bulgarian shareholders as boardroom wars escalated and the government blacklisted SportPesa over money laundering and tax evasion claims.
An attempt by the BCLB to stop Milestone from using the SportPesa platform was thwarted last December when the High Court barred the BCLB from interfering with Milestone’s business and operations, pending the hearing and determination of the matter. That saw Milestone continue to use the SportPesa name and domain as well as its paybill numbers.
Former SportPesa shareholders claim in court papers they have lost billions of shillings in the transactions. Also sucked into the saga are Safaricom and Airtel, which operate the SportPesa paybill numbers.
For instance, in February 2021, Milestone accused Airtel executives of failing to unblock the short codes and wanted them jailed for contempt of court in the raging drama over the control of betting billions.
The latest acrimony started when Pevans East Africa lost its gaming licence, and there emerged Milestone Games, a new entity with some shadowy shareholders. It was only after Milestone was registered by BCLB that it emerged that the company was partly owned – through a dummy company -- by SportPesa CEO Ronald Karauri.
Legal tussle over SportPesa
Former SportPesa chairman Paul Ndung’u, and other local shareholders are now embroiled in a legal tussle over the control of the betting giant, which lost its gaming licence after the Kenya Revenue Authority demanded more than Sh92 billion in tax arrears and after some of the company’s foreign shareholders were accused of engaging in money laundering and tax evasion.
The Kenyan shareholders claim they had used more than Sh40 billion within five years, to promote the brand locally and internationally before it become one of the main arteries of money outflow from Kenya. That was before the company became a subject at the National Security Council meetings chaired by President Kenyatta, who ordered security agencies to crack down on gambling and money laundering.
Soon, as Interior Cabinet Minister Fred Matiangi moved in to clean up the sector, Pevans East Africa lost its licence to operate in Kenya and that meant that the cash cow was running on empty. But in a meeting in London attended by the Bulgarian shareholders, it was agreed that since the trademark SportPesa was registered at the international registry at the World Intellectual Property Organisation (Wipo) under Pevans East Africa, this could be transferred to a new entity.
First, it was assigned to SportPesa Global Holdings UK in a letter dated September 9, 2020 from Pevans executives and lawyer in Nairobi. Then on September 14, 2020, the Registrar of Trade Marks in Nairobi assigned the trademark SportPesa to SportPesa Global Holdings Ltd, and its address was given as Gordon Dadds Corporate Services situated on 2 Leman Street, London.
The question that had intrigued the SportPesa Kenyan shareholders is how a trademark worth billions of shillings was changing hands without a board meeting – and with many of the shareholders in the dark. It is this battle that has been raging in the courts.
On October 26, 2020, Mr Karauri sent a ‘whomever it may concern’ message notifying them that SportPesa Global Holdings had granted “non-exclusive licence” to Ms Milestone Games Ltd and that it would run SportPesa. He never revealed his shareholding in Milestone.
Pevans East Africa, which Karauri was a part of, is still under investigation, with KRA contending that it was involved in “an intricate and complex tax evasion and money laundering syndicate involving violation of provisions of income tax, value added tax... and Anti-Money Laundering Act, among others.”
Without a licence to operate, it now means that the fate of SportPesa in the gaming business is now a bad bet.
