iGaming Business magazine iGB 112 Sept/Oct 2018 | Page 72

Africa Focus
bets, this is one of the issues hampering further development
of its regulated market, says Felix Mukaxe, gaming inspector
at the Mozambique Gaming Board. He says he was forced to
cancel his planned trip to iGB Live! earlier this year due to
budget issues. “One of the constraints that we have is that we
are a government department. Our gaming board is a government
department, not independent, so we work with budgets which
are very tight sometimes. That means we have challenges to attend
conferences in Europe.”
Could operators be part of the solution?
While there may currently be a lack of understanding among some
Africa regulators, Mukaxe says Mozambique, for example, is keen
to learn from companies operating in highly regulated markets in
Europe. “We are willing to partner with good operators from Europe
that can bring technology to Mozambique and help us to consolidate
our regulation and to consolidate our market.”
Mpiirwe says that one of the reasons Uganda revised its gambling
legislation in 2016 was to make the country “more attractive to
international operators”.
Talking tax
Nevertheless, countries such as Mozambique are increasingly
becoming interested in attracting more operators to their markets
due to the potential to raise much-needed taxes. “We have taken
that decision to make our market grow because before that the
market was very small and it was not growing but with online
gaming it is growing,” says Mukaxe. “We are increasing our tax
revenues and another benefit is that we use part of the revenues
for good causes, for social causes, so we benefit from that.”
Unfortunately, in Africa – and it’s worth mentioning this has also
happened in more developed parts of the world – some governments
get carried away at the prospect of additional revenues and end up
setting tax rates too high to allow their market to thrive.
In cases such as Kenya, we’ve yet to see a backtracking of the
punitive tax rate and Maikori says this has definitely slowed the
market. “The tax change did not only dampen spirits, a couple of
people have pulled out.”
Some policymakers are more willing to listen to the sector than
others, however. James Mpiirwe, board secretary at Uganda’s
National Gaming Board, admits Uganda made the same mistake as
Kenya, but says it quickly reversed the decision. “We increased ours to
35% as well and got a very bad backlash from the sector. It was done
by parliament, misadvised and we got a backlash from the operators
so we withdrew very quickly.”
The issues with setting tax are tied in to the more general lack
of understanding, says Whitesman. “Setting gambling taxes is a
sophisticated exercise as it is. You’ve got to know what you are doing.
I think it has got to be realistic and I don’t think that the regulators
quite appreciate by and large that gambling businesses don’t work
on as large a margin as they think they do. I think they are under the
impression that all gambling businesses simply print money.”
68

iGamingBusiness | Issue 112 | September/October 2018
“I don’t think that the regulators
quite appreciate by and large that
gambling businesses don’t work on
as large a margin as they think they do”
Although enforcement of illegal operators is minimal in Africa
and operators can quite easily set up unlicensed operations,
Whitesman says there has been a shift in attitude in recent years and
that operators themselves are now driving the move towards greater
regulation. “We have seen a change in mindset in the last five years
or so. You will always get operators that will be prepared to operate in
a grey and/or black environment, but what we’ve started to see, and
I think it started with the increased state-by-state regulatory regime
that started to come through in Europe, is that most decent operators
are starting to adopt the mindset of being regulated in virtually every
single territory that they can.”
Although the pace of change may be slower than some would
like, most seem to agree that the impetus is certainly there for a
substantial increase in regulation in Africa. “I can see it is improving,”
says Ali. “In the next five years I am sure most of the regulators will be
up to date and with internet penetration also improving the prospects
look much brighter.”
Whether or not the increase in regulation will drive a significant
change in the number of illegal operators in the market remains to be
seen, but it seems that many African regulators are at least moving in
the right direction.