GOVERNMENT BANS SMS LOTTERIES
By Dominic Wabala, Daily Nation, 15th February 2011
The government has temporarily banned all Short Message Service-based lotteries that have been raking in millions of shillings in recent months.
The ban came as it emerged that the Kenya Anti-Corruption Commission (KACC) had launched investigations into the activities of the Betting Control and Licensing Board (BCLB) following complaints from industry players.
KACC spokesman Nicholas Simani said detectives were carrying out investigations into the activities of the Board, which oversees the licensing and running of lotteries and casinos in the country.
“A team of detectives from our office is currently conducting investigations at the Betting Control and Licensing Board following complaints,” Mr Simani told the Sunday Nation.
The investigation comes hardly two weeks after the board and Interactive Media Services – which was running the Shinda Smart 6969 lottery – were involved in a controversy that resulted in the government banning the SMS lottery promotion.
Sources said detectives had carted away for audit files relating to all licences issued to lotteries and minutes of BCLB meetings since 2008.
The ban was effected a few days before the latest SMS lottery promoter, Amaya Gaming Group Inc of Canada, and licensed by the Betting Control and Licensing Board in January 2011, was scheduled to begin operations in Kenya.
Meanwhile, it has emerged that the Government, Safaricom and Airtel mobile service providers, Premium Rate Service Providers (PRSP) and promoters have been raking in millions of shillings from the SMS lottery craze which has taken the country by storm.
Documents seen by the Sunday Nation showed that of the millions collected from participants in the SMS lotteries, the mobile service providers, the tax collector and premium rate service providers were collecting about 61 per cent up front while the lottery promoters got 39 per cent of the money collected.
For example, of the Sh1.2 billion collected from the SMSs sent to Shinda Smart 6969, Safaricom received 30 per cent or Sh14.29 per SMS while Sh12.38 was paid as VAT and withholding tax to the Kenya Revenue Authority (KRA).
Airtel received Sh13.10 or 40 per cent from each SMS. KRA got Sh11.35 for each SMS.
According to the documents, one SMS lottery promoter received 10 million messages in one month, pegged at Sh69 per message.
Once the SMSs are received, the mobile service providers deduct their charges before passing the rest to the tax collector and the promoter.
One mobile service provider charged Sh23.81 or 50 per cent for the first 100,000 SMSs, Sh19.05 or 40 per cent for between 100,000 and 500,000 SMSs and Sh14.29 or 30 per cent for 500,000 and more messages received.
The mobile service providers then passed on 16 per cent of the SMS value, plus VAT and withholding tax, to the tax collector while the PRSP, which acts as the lottery promoter’s platform, received between five per cent and 10 per cent of the SMS value.
Posted on Monday, February 21, 2011