In just four years, the ownership of Milestone Games Ltd, the holding company that operates the SportPesa brand in Kenya, has moved from being dominated by a few Kenyan tycoons to being led by a UAE-registered company.
The dramatic ownership changes have also seen little-known Commtech Consortium Ltd acquire a 25 per cent stake in Milestone Games, and quietly exit ownership of another company providing the digital platform for Kenya’s Social Health Authority (SHA) in a Sh104.8 billion deal.
Business Registration Service (BRS) records show that Commtech Consortium now owns 2,500 shares in Milestone Games, which operates one of Africa’s best-known betting platforms in SportPesa.
The share acquisition has made Commtech Consortium the second-biggest shareholder of Milestone Games, only second to another new investor in UAE-registered Techglow Ltd.
Techglow now owns 54 per cent of Milestone Games in share transfers that have seen the ownership of businessman Robert Macharia and Ronald Karauri diluted from 71 percent and 13.4 percent, respectively.
The regulatory filings place the direct stakes of Mr Macharia and Mr Karauri at 0.75 percent and 3.0 percent, respectively.
The ownership shifts in Milestone Games have emerged in the middle of a boom in the sector, with gamblers placing bets worth a record Sh330.5 billion in the year to June as the State eased punitive taxes on the industry.
At Sh330.5 billion, the bets surpassed the Sh145 billion that retail, foreign, and high-net worth investors splashed on purchase of shares at the Nairobi bourse, which posted a return of 34 percent.
This underlines the outsized dividends available to owners of betting firms.
Under UAE law, company shareholding and directorship records are not public documents, making it difficult to establish the beneficial ownership of companies registered in the emirates.
Techglow is registered in Ras Al Khaima.
Ras Al Khaima is one of the seven emirates that make up the UAE. It is located on the UAE’s northern coast, approximately 100 kilometres northeast of Dubai.
Publicly available records online did not provide any information on Techglow other than its registration in Ras Al Khaima.
There was no company website or social media pages linked to or associated with Techglow.
In a separate round of ownership changes, Commtech Consortium is no longer listed in the ownership structure of the firm that built and leased the digital platform to SHA.
A consortium of Safaricom PLC, UAE-registered Apeiro Ltd and Konvergenz Network Solutions is developing and leasing to the Health ministry a system integrating Kenya’s public health ecosystem, for Sh104 billion over 10 years.
Commtech Consortium owned 22.5 per cent of Konvergenz Network Solutions when the consortium was formed.
That 22.5 per cent stake is now in the hands of UAE-registered Starway Trading Ltd, BRS filings show.
It is unclear whether that transfer was the result of a share sale to the UAE firm, or whether Starway Trading is an offshore vehicle owned by Commtech Consortium’s shareholders.
The Business Daily was unable to get a comment from Commtech Consortium because calls listed at BRS were unanswered.
Emails sent to Konvergenz Network Solutions on the ownership changes were also not responded to by the time of going to press.
Commtech Consortium was incorporated on March 23, 2023.
Dadson Wahagi Mugo owns 80 per cent and Elvis Charo Kitsao has a 20 per cent stake, according to BRS records.
Milestone Games has two shareholders – Commtech Consortium and Nob Five Ltd, with a 75 percent stake.
Benard Chauro Matoke is listed as the only director in Milestone Games, but holds no shares.
A breakdown of Nob Five owners reveals seven shareholders, including Techglow, Mr Macharia, Mr Karauri and James Ngengi Muigai, a relative of former President Uhuru Kenyatta.
White Hart Ltd, owned by businessman Tom Waireri Thuo, a top shareholder in Nob Five, is the third-largest owner of Milestone Games, with an 11.6 per cent stake.
SportPesa exited the Kenyan market in 2019 amid a tax dispute, which also saw its operating licence suspended.
At that time, its owners were largely consolidated under a different holding company – Pevans East Africa.
In November 2019, SportPesa halted operations due to a drastic hike in taxes on betting stakes and a multi-billion shilling demand from the Kenya Revenue Authority (KRA).
Pevans East Africa, the original owner of the SportPesa trademark, would later transfer the brand to UK-based SportPesa Global Holding Limited (SGHL).
Milestone Games was subsequently assigned the right to use the SportPesa trademark in Kenya by SportPesa Global in the roundabout deals, sparking shareholder fights in Pevans East Africa.
Data from the KRA revealed the boom in online gambling after the taxman netted Sh16.5 billion in excise taxes from the industry, surpassing its target by 15.9 percent.
This emerged in a period when Kenya lowered excise duty to 5.0 percent from 15 percent, offering relief to gamblers.
The cut in the excise rate likely encouraged more gambling activities as the taxman rejected a push to encourage betting, linking the rise in collections to improved tax administration.
As a boom in online gambling across Africa gathers pace, governments are hiking taxes to contain addiction risks and fill depleted public coffers.
But Kenya pushed back from the higher taxes in the year starting July 2024.
Betting firms across the continent have lobbied hard against higher taxes, arguing that the tax would not curb problem gambling but instead push it to underground sites, which they say would proliferate without the extra burden of the levies.
Once a niche activity, gambling has exploded across the continent as a result of easily available online betting accounts.
The outsized stakes underline Kenya’s ranking as Africa’s top betting market. A GeoPoll survey, published last month, showed that 64 percent of respondents in the country had placed a bet on at least one football game in the past 12 months.
Kenyans outpaced other African peers with the high level of sports betting engagement in the past 12 months, beating Ghanaians and South Africans, who ranked second and third with engagement levels of 60 per cent and 58 percent, respectively.
