Sports betting: Youth left in vicious cycle of poverty
Posted Tuesday, March 15 2016 at 02:00
Every day, youth in Uganda are getting desperate due to high unemployment and consider gambling as a ‘tentative’ solution to the problem. But betting companies are instead enriching themselves at the expense of youth in an industry that is poorly regulated with low tax yields, as Ismail Musa Ladu writes
Stories of people gambling themselves into utter poverty are no longer foreign tales or stuff Ugandans watch in a movie.
It is becoming increasingly evident that gambling, if not swiftly and tightly regulated, could be a recipe for both social and economic disaster as more youth take to the game of chances, particularly sports betting, on the grounds that it is a source of livelihood.
A recent research conducted by the Economic Policy Research Centre (EPRC), in addition to several policy briefs done by the autonomous not-for-profit organisation give credence to the aforementioned development.
Based on a household survey conducted in April last year in Kampala city, EPRC researchers found out that approximately one in every four adults had engaged in some form of gambling in the 12 months preceding the survey.
The survey also showed age, income, employment status and gender as major determinants influencing gambling participation.
Draining the poor
Gambling has become rampant, with urban youth being the most victims. A manager of a sports betting house said he cashes in more than what is paid out. They rarely payout more money than they collect. A busy betting house can even cash in Shs10 million in a day and only payout about a million or less.
Troubling perhaps, the EPRC reports, conducted by a team of researchers led by Gemma Ahaibwe, an EPRC research fellow, revealed that those who engage in gambling such as sports betting are those who are living from hand to mouth.
The EPRC authored report, noted: “... we find that, on average, the poorest in society spend a higher proportion of their personal income on gambling compared to their richer counterparts.”
As a result, sports betting has contributed to poverty and domestic violence in several homes.
This, according to the EPRC findings, is manifested in several forms. A gambler, for instance, would rather provide less for household needs or even jeopardise savings which could be handy in future at the expense of tempting sports betting odds.
Low revenue versus weak sector regulation
In terms of revenue, the percentage contribution of the gambling industry to total revenue, according to the EPRC findings, is still low although growing.
Quoting Uganda Revenue Authority (URA) figures, the report said: “In nominal terms, gambling related tax revenue increased by over forty-fold over the past decade, from Shs0.24 billion in 2002/3 to Shs11.1 billion in 2013/14. The revenues were obtained through taxes on turnover (20per cent), winnings (15 per cent) and other charges.
The low tax yield can be explained by the inability of URA and the National Lotteries Board to track gambling transaction in real time due to absence of appropriate technology.
The EPRC report further attributes challenges such as the presence of gambling promoters (and branches), existence of unlicensed outlets, including those operating in makeshift premises, all affecting effective tax collection.
Further, laws relating to lottery and gaming have become obsolete and are not sensitive to the new modes of gambling and the unprecedented growth of the industry.
According to the EPRC briefs and reports, the regulatory body –National Lotteries Board – has substantial capacity problems and limited statutory powers.
This hinders the regulator’s ability to properly exercise its mandate of regulating the gambling industry.
“They have inadequate provisions for standards of gambling premises, no stringent restrictions on misleading advertising and promotion of commercialised gambling, and no provision for certification of machines and devices used in gambling activities.
“The current laws are unclear, not detailed and do not adequately cover the whole gambling spectrum. The policy and legislation relating to gambling should be very clear, well-formulated, detailed, and should cover as much as possible of the gambling spectrum,” EPRC reports reads in part.
Limited economic benefits and bad for Uganda
As if that is not already enough of a problem to deal with, economic analysts, sector experts, government technocrats and planners have dismissed the economic benefits of gambling, in this case sports betting, saying its contribution is negligible in Uganda’s situation.
Interviewed for this article, the director for development planning at the National Planning Authority, Mr Patrick Birungi, said: “Economic benefit accrued from sports betting is limited because bits of employment and revenue it provides cannot be compared to the social cost at stake.”
He continued: “Young people are staying away from real productive work; they are no longer feeling challenged and thinking innovatively. Many divert money for good cause into sports betting — unproductive venture. And it is addictive.”
Birungi is also of the view that unlike in developed countries where people have enough or extra money to spend, gambling industries in Uganda, particularly sports betting, are dominated by those who barely have enough to sustain their livelihood.
He said in developed economies, it is the rich that gamble, something that is the opposite in Uganda.
Although he recommends stricter regulation, he regrets that this is not an area that policies prioritise, because it has not been assessed yet.
Weighing in on the matter, Kanyomozi Yonasani Bankobeza, a consultant in resource development and management, said betting is not a productive activity, because it can destroy the morale of young people.
According to Kanyomozi, also a veteran politician, betting tends to invoke speculation, something that, in itself, is problematic. For that, young people should avoid being turned into what he described as high speculators.
Importantly perhaps, Kanyomozi believes Uganda is getting a raw deal from betting companies. He said: “The money collected from our people here is all repatriated. Majority of people who own the betting houses are foreigners. This is bad both economically and socially.
Coupled with the false gain gotten out of the sporadic wins, the situation can only get disastrous. This betting thing is not a good idea for a country like Uganda. I would prefer a national lottery, but sports betting, its impact is negative.”
Not a pillar for development
Development analyst and the coordinator for Civil Society Budget Advocacy Group, Mr Julius Mukunda said he is not aware of any economy that has developed as a result of betting.
With betting, he said: “It is the rich who takes away from the poor rather than the other way round.
“Normally the rich appear to appease you that you can also get rich. But what happens they enrich themselves further at your cost.”
He said betting widens inequality and its social impact, including cases of addiction, depression, poverty and even suicide has far reaching consequences than the gains it appears present. Even the taxes collected from it are more of a deterrent and not a proud way of collecting revenue.”
Dennis Kikonyogo, the secretary and acting chairman of Sports Betting Association of Uganda (SBAU) appears balanced on this matter.
He said he understands both side of the coin, arguing that with proper regulation the industry, whose total value here is not known, can be beneficial.
Policy briefs produced by EPRC indicate that stakeholders in the gambling industry think the current legislation is not detailed and clear on what forms of gambling it covers.
Furthermore, with technology advancements that have enabled other forms of gambling such as internet and mobile phone gambling, the current laws are rendered obsolete.
On the policy front, the report said: “We propose that the public should be protected from over stimulation of latent gambling through limitation of gambling opportunities: by imposing tighter restrictions on advertising; tighter restrictions on entry into gambling establishments, based on age; and limitation of opening hours among others.”
It added: “In congruence, Parliament should expedite the passage of the Lottery and Gaming Bill (2013) into law to empower the National Lotteries Board with more statutory powers and provide a basis for addressing capacity and financial challenges that they currently face.
“In line with this, there is a need to minimise the negative social and economic impacts of gambling by promoting responsible gambling and providing support and counselling to problem gamblers.”
A gambler’s experience
Anderson Kiwuwa, 29, is a betting addict who is about to gamble his life away. People around him, including where he gambles from, are now afraid for him, because he rarely wins despite spending all his money and time betting.
Although he seems to understand the state in which he is in, he cannot exactly tell how he arrived there.
According to Kiwuwa, he has been gambling since he was 19. But the urge intensified when he got a job as a pump attendant. He was 23 then.
At first, all seemed well as he would win some and lose some. But soon his luck appeared to be running out until it finally dried up.
Being an addicted gambler Kiwuwa’s employers, given the nature of his work could not trust him anymore. Currently, Kiwuwa, an accountant by profession is not only out of work but he has become a nuisance.
He has since depleted his household properties through gambling away with a hope that he will replace them after winning a huge bet. He is still a regular participant at sports betting houses.
Regulation. Presently, the gambling industry is regulated by the National Lotteries Board (NLB) and is guided by the National Lotteries Act of 1967, the Gaming and Pool Betting (Control and Taxation) Act of 1968, and an addendum of statutory guidelines introduced in 2012/13
Lotteries law. Whereas the law relating to lotteries is contained in the National Lottery Act of 1967, casinos and other gaming activities are regulated under the gaming and pool betting (Control and Taxation) Act of 1968.