THOUGH just about five years old in Uganda, sports betting has spread like a wildfire and is sucking millions of shillings out of Ugandan youths’ pockets daily
By Francis Kagolo
THOUGH just about five years old in Uganda, sports betting has spread like a wildfire and is sucking millions of shillings out of Ugandan youths’ pockets daily.
Sports’ betting is an entertainment activity of predicting sports results and placing a stake on the outcome.
It appears so lucrative that some gamblers are known to have taken short term loans to invest in sports betting while others have sold their property with the hope of winning from the game.
Jacob, was a Makerere University second year student pursuing a bachelors’ degree in information technology (IT) in 2010 when he gambled his sh1.5m tuition money on a match involving his favourite team hoping to multiply it to fund his lavish lifestyle. But as fate would have it, Jacob lost.
“I was introduced to sports betting by friends who said they were making a lot of money. I started betting with sh1,000. When I thought I had learnt the game, I increased to sh100,000 and sometimes beyond.
“I am now out of the university doing nothing. Life is hard and my parents are not willing to fund my education anymore,” he confesses.
Students most affected
Students are highly susceptible to the sports betting temptation. There are hundreds of betting companies set up near universities and students’ hostels around Kampala to tap into this already exposed market segment.
In Wandegeya, Kikoni and Katanga slums near Makerere University, there are about 200 outlets.
“Campusers (students) bet a lot. My friend one time staked sh700,000. He was beaten and missed exams. He ended up applying for a dead semester,” says Joel who graduated in January with a Bachelor of Arts in Arts degree.
But bettors don’t lose all the time, at least according to Joel’s testimony.
“There was a time I was going to miss exams for lack of fees, then I bet with sh1,000 and earned sh480,000. It saved me,” he recalls.
“I got so excited with that win that in the following days I would buy 15 tickets of sh1,000 each about four times a week. But I would only win once. I made losses,” Joel reminisces and vows never to bet again.
Sports Betting Africa (SBA) director of corporate affairs, John Ejalu, also says sometimes the company can record 100% payouts though this couldn’t be verified.
The problem is that the joy doesn’t last for long before one loses again and often more times.
Makerere University dean of students, Cyriaco Kabagambe, says betting has degenerated into a menace that is threatening the core reason why students go to university.
“It is one of the reasons why we came up with a policy that requires students to pay at least 60% of tuition fees by the sixth week,” Kabagambe explains.
“We request that parents pay fees directly to the university account.”
The first sports betting company started in Uganda in 2007. Since then, the game has grown enormously, attracting over 30 operators and close to three million bettors.
SBA, one of the betting companies receives between 150,000 and 200,000 clients on a busy Saturday when most English Premiership games take place, according to Ejalu. Ejalu, also chairman of Uganda Sports Betting Association, says SBA has over 700 outlets in towns across the country and still plans to expand, thanks to the lucrative business.
A sports betting receipt costs a minimum of sh1,000. A company that attracts 100,000 clients a day could collect about sh100m, if the other bets, which go for sh5,000, sh50,000, sh100,000, sh1m and above are not considered.
Betting companies are excited about the booming business.
“The rate at which sports betting is growing is the highest; no other business has ever attained it in Uganda,” says Habil Musa, the general manager of Kings’ betting.
“It is addictive; once you enter, it is difficult to go out. The crowds that flock our centres are unbelievable.”
Most bettors are youth who are either jobless or with small odd jobs or students who are wooed by the prospect of getting quick money.
Critics and victims of the industry argue that unless it is restricted, sports betting will harm the economy. Prof. Samuel Sejjaaka, the deputy principal of Makerere University Business School (MUBS), explains that sports betting, like other forms of gambling, is a ‘zero-sum game’.
“The way the proceeds are shared is such that many people lose their money and only a few get, but the organiser remains the largest beneficiary,” Prof. Sejjaaka explains.
According to Ejalu, SBA works under the estimation that over 70% of a day’s income will go back to lucky bettors. Although sometimes more people win than lose, rarely is it the case. Indeed, the New Vision investigations have revealed that betting operators bag billions annually.
Laxity in regulation
Ironically, regulating betting has remained wanting in Uganda even as the wagering continues to extend to rural areas.
The booming betting business is being monitored by only three government employees at the National Lottery Board (NLB).
The board has only one inspector charged with overseeing 29 registered businesses with over 300 branches and thousands of outlets across the country.
James Mpirwe, the executive secretary of the board says the inspector was hired a year ago as the gambling sector exploded. The board had been in place for decades but without staff and a secretariat, which was only set up in 2010.
NLB chairperson Manzi Tumubweine, adds that with only one inspector and two other full time staff, the board cannot effectively monitor the sector.
“The businessmen in gambling have outgrown us in terms of resources and technology because the Government and the public had for decades ignored the sector,” Manzi affirmed.
Manzi and Ejalu said unscrupulous businessmen some of whom are foreigners were taking advantage of the loopholes in the regulatory framework to exploit the public by not paying correctly and promptly.
Others allow children to be bet, which is considered a taboo in the gambling fraternity.
Payment of Taxes
The Uganda Revenue Authority says it collected sh2.2b tax from sports betting alone minus other forms of gambling last financial year (2011/2012).
But, since more players have entered the market, the Authority projects to get sh7.4bn from the entire gambling sector this financial year.
Ejalu claims SBA alone paid sh3b which is 20% of their earnings in taxes last year (2012) meaning one company could be making up to sh15b a year. New Vision could not independently verify this information.
However, a three week search for a bettor who made a good a profit not on a single bet, but over a period of about a year in Kampala, was futile.
“Sports betting, like any other form of gambling. It is addictive,” explains Farid Mpagi, a sports analyst.
Economist and poverty eradication expert, Prof. Augustus Nuwagaba, explains that “Sports betting has led to a lot of wastage of human resources in an unproductive sector, which doesn’t add value to the economy.”
However, Nuwagaba was quick to empathise with the bettors, saying most of the youth join gambling as the last resort for lack of better job opportunities.
Different reports put youth unemployment between 60% and 80%. Statistics from the gender and labour ministry show that about 400,000 youth graduate annually to compete for 9,000 jobs available.
“You cannot blame the youth for gambling. They lack both jobs and capital to start businesses. So gambling is one of the areas where they expect something,” Nuwagaba argues.
“If they had capital, or if there were better market systems in agriculture, you wouldn’t see them wasting time in betting.”
Is betting necessary?
According to Ejalu, betting is good for the economy as it creates jobs and generates taxes. “A lot of bettors are from the informal sector where tax evasion is highest. It is only through betting that the Government can collect that tax from them,” argues Ejalu.
But Prof. Ssejjaaka insists “It is socially counterproductive as it directs resources away from socially beneficial projects to betting, which is just another form of entertainment.”
According to Prof. Nuwagaba, it is ‘irresponsible’ to argue that betting is good for the economy on basis of taxes. “The ministry of finance cannot argue that they get revenue from gambling,” he said.
“They would get more money if those many youth were engaged in other productive work.”
Prof. Sejjaaka warns of a likely increase in poverty levels, if the Government fails to control sports betting.
He says betting can be catastrophic especially when illiterates in rural areas get involved, saying they can easily sell their property or borrow money to bet on football matches in the hope of hitting a jackpot.
“Very many of these bettors are losing their money. It is important that betting is controlled. Otherwise there will be more impoverishments of people, especially illiterate ones,” says Prof. Sejjaaka.
Aside, wherever there is gambling and loss of money, poverty, crime, drug abuse and lawlessness, are always close by.
“Many people who used to steal at the university are sports bettors,” Joel says. Other people hang around betting outlets in the city suburbs as they abuse alcohol and drugs even during the day.
Either in a bid to discourage or control betting, the Government this financial year increased gaming and betting tax from 15% to 20%.
Sports betting in other countries
Although prominent in Europe, sports betting has been heavily restricted in many countries including the US.
The US Congress passed the Professional and Amateur Sports Protection Act in 1992, more or less banning sports betting, according to US Law Review Commentaries.
Only a few states like Nevada, Oregon and Montana were exempt from the ban because they had some form of legalised sports betting at the time the Bill was passed.
Although Police have failed to curb illegal betting in India, gambling remains heavily restricted. The Public Gambling Act of 1867 prohibits running or being in charge of a public gaming house.
The penalty for breaking this law is a fine of 200 rupees (about sh10,000) or imprisonment of up to three months.
In the UK, the Gambling Act 2005 set up a Gambling Commission with measures to protect children and vulnerable adults and brought online gambling within British regulatory jurisdiction. The law requires betting operators in UK to stop a client if he has exceeded acceptable limits.
In Africa, countries like South Africa disallow internet-based gambling offered through servers located outside the country. Media are also severely restricted as far as gambling adverts are concerned.
In neighbouring Kenya, the government set up a Betting Control and Licensing Board through an Act of Parliament in 1966, which provides for the control and licensing of Betting and Gaming premises and the activities carried therein as well as eradication of illegal gambling. But sports betting is just catching up, having been introduced there by Ugandans in 2011.
But unlike Uganda, Kenya’s board has seven operational offices spread across the country. The board particularly protects children below 18 years from betting.
Betting is said to have been introduced in Rwanda in 2008, but it remained virtually restricted until last year. Even when the Rwanda government passed the Gaming Tax law in September, 2012, stringent measures including taxing both the operators and lucky bettors were maintained.
While operators pay a “Gaming Special Tax” of a flat rate of 13% of their gross margin, lucky bettors are required to pay 15% of their net winning.
Students most hit by sports betting