Sunday, 21 July 2019

Barely heard of in Britain until it launched a spree of Premier League club sponsorships in 2016, the online gambling platform SportPesa has since spread its name across football, rugby, horseracing and Formula One, associating its branding with good works in Africa.

At Everton, where SportPesa is the main sponsor, its name is prominent all over Goodison Park, the club have been in Kenya for a pre-season tour, and they promote SportPesa’s "Kits for Africa" initiative, with a donation bin in the club store.


Everton’s chief executive, Denise Barrett-Baxendale, wrote in the club’s annual report: "We value our developing relationship with SportPesa, who have demonstrated a strong alignment with our values." A spokesperson for Everton, who describe themselves as "the people’s club", said Barrett-Baxendale was referring to the sponsor’s support for the club’s extensive community work, which she herself pioneered in the deprived areas around Goodison Park.

Founded in Nairobi as a partnership of wealthy, politically influential Kenyans with Bulgarian investors, SportPesa mined its huge fortune exploiting an online gambling craze in the country. Interior minister Fred Matiang’i warned recently of rising addiction and suicides, adding that gambling will "destroy the moral fabric" without strengthened regulation.

In the UK, while SportPesa has promoted its brand through the Everton sponsorship and partnerships with Arsenal, Southampton and Hull City, it makes use of the "white label" system, allied to a company, TGP Europe, registered offshore in the Isle of Man, a tax haven.

This structure, permitted by the UK government, means SportPesa does not require a licence from the Gambling Commission, UK bets are paid to the Isle of Man, and no SportPesa company appears to pay UK corporation tax on those revenues, nor contribute to UK gambling welfare programmes.

Campaign groups including Gambling with Lives have criticised the English football establishment for selling its appeal so enormously to gambling, with many Premier League and Football League clubs – and the EFL divisions themselves – sponsored by betting companies, and concerns are escalating about problem gambling and the game’s "gamblification".


SportPesa grew rapidly in Kenya to dominate online gambling by zealously exploiting the mass arrival of mobile phone technology from 2014, and sponsors the country’s Premier League. With little regulation and no welfare or research similar to even the UK’s limited industry-funded framework, serious problem gambling appears to have become entrenched among the young people, who are gambling and losing far more than elsewhere in sub-Saharan Africa.

Mr Matiang’i, finally proposing new regulation in May, said $2 billion (Sh200 billion) was gambled annually in Kenya, mostly by low earners, and that 500,000 young people defaulted on loans to fund gambling. Last week SportPesa was among a number of gambling companies whose licences were suspended because of reported concerns about non-compliance with regulations, although SportPesa said it did comply and is continuing to operate because of a court order.

Ivaylo Bozoukov, SportPesa’s director of global strategy, told the Guardian that SportPesa’s expansion into the UK, which includes offices in Liverpool’s Liver building where Everton are also based, was funded by the profits made in Africa. Well-placed sources have told the investigative website Finance Uncovered that SportPesa made more than $1 billion (Sh100 billion) revenues last year in Kenya, but the company does not make its revenues or profits, in Africa or the UK, public.

A spokesperson described that figure as "a very significant overstatement" and said: "As is common with private companies, we have made a commercial decision not to publish our revenues in order to protect our competitiveness."

SportPesa does have a UK-registered company, SportPesa Global Holdings, formed in March 2017, which does declare its shareholders and accounts, but the brand’s structure means that its UK gambling revenues do not appear to be received by that company.


The holding company’s largest Bulgarian shareholder, Mr Guerassim Nikolov, a casino owner, moved to Nairobi in 1999 from Sofia, where he operated a casino, and he founded SportPesa in 2014.

Described as the group chief executive, Nikolov wholly denies claims made in Bulgarian media in 2006 that he left the country after being questioned by police in relation to an alleged criminal incident.

Asked by the Guardian about these claims, a SportPesa spokesperson said: "Mr Nikolov vehemently denies the allegations contained within the stories you have highlighted to us and we strongly urge you to treat any claims – most of which are made in personal blogs and by anonymous sources – with extreme scepticism.

"Mr Nikolov has non-operating interests in casinos [i.e. he is not involved in the day-to-day running of them]. Mr Nikolov has passed the know-your-client checks of regulators in several jurisdictions including some of the most rigorous authorities around the world."

Mr Nikolov and other Bulgarian investors are said to have provided the gambling and digital technology expertise in the partnership that founded SportPesa.

The largest Kenyan shareholder is Ms Asenath Wacera, whose late husband, Mr Dickson Wathika, was the mayor of Nairobi and a long-term friend of President Uhuru Kenyatta. Mr Paul Wanderi Ndung’u, another major shareholder, is a prominent entrepreneur in Kenya, having invested early in mobile telecommunications, and he is a major financier and fundraiser for Jubilee party.

In June 2017, President Kenyatta reversed a pledge for a 35 per cent tax on gambling to fund sport, arts and universal healthcare after relentless lobbying by SportPesa and other gambling companies.

Instead, after his November 2017 re-election, the president introduced a 15 per cent rate, while imposing a 20 per cent tax on individual gamblers’ winnings, explaining this was "in order to enhance equity and fairness".


President Kenyatta’s spokesperson did not respond to an inquiry from the Guardian about whether the lobbying from SportPesa or the gambling industry had an impact on his change of stance.

SportPesa responded by saying: "Our growth is attributable to outstanding customer experience and we refute any suggestion that the company has sought advantage through political connections."

SportPesa’s use of the UK’s "white label" system, in common with many overseas-owned gambling companies including several more Premier League sponsors, is noted in small print at the bottom of its alluring UK website.

"SportPesa is powered by TGP Europe Ltd of … Douglas, Isle of Man," it notes. "TGP Europe Ltd is licensed and regulated by the Gambling Commission of Great Britain for provision of services to the United Kingdom."

The system means TGP Europe provides the actual gambling operations for SportPesa and other companies marketing themselves in the UK. The money supporters of Everton, Arsenal, Southampton, Hull City and other British people bet through SportPesa’s app and website appears to be actually paid to TGP Europe in the Isle of Man.

SportPesa, as a non-licensed company, also has no responsibility to contribute to GambleAware, the UK industry-funded organisation providing welfare and education about problem gambling.

A voluntary code is applied by companies to donate 0.1 per cent of their gross gambling yield, but GambleAware’s list of 2018-19 donors revealed that TGP Europe contributed only £100.

The SportPesa spokesperson said of this minimal contribution: "We share your concerns about this and raised the issue with TGP directly. As a result, they have now agreed to increase their annual contribution to GambleAware to £10,000."


Isle of Man-registered companies do not pay UK tax or publish financial accounts, so there is no available record of how much money TGP or SportPesa are making from their expanding UK gambling operations.

The owners of TGP Holdings are listed as three Isle of Man trusts and one trust based in the British Virgin Islands, another tax haven.

There is no public information about who the beneficiaries are of these trusts.

TGP Europe did not respond at all to questions about the structure of its operation, the revenues from SportPesa and whether any UK corporation tax is paid.

In its statement, SportPesa did not respond to questions about the company’s UK revenues or whether UK tax is paid on them.

Its spokesperson said: “We are a socially responsible business that puts tremendous emphasis on grassroots sport and community development. We are fully compliant with all UK and international legal requirements and, as a company that operates in highly regulated markets, we take our responsibilities extremely seriously.”


In response to the wider question of how renowned English football clubs decide to partner their names so wholeheartedly with gambling companies, particularly where brands are linked offshore and their finances are not publicly transparent, none of the clubs would explain their decision-making process.

Hull City declined to comment, as did Southampton, whose three-year partnership with SportPesa ended last season.

An Everton spokesperson said in a statement: "As with all our partnership agreements, a due diligence process was carried out both by the club and external advisers. Through this, we obtained the assurances we needed in order to proceed with a partnership with SportPesa."

A spokesperson for Arsenal, whose partnership with SportPesa finished in May, said: "We do not discuss the details of any of our commercial partnerships, but would point out that we conduct due diligence checks via third-party organisations where appropriate before entering into agreements."


This story was first published by The Guardian

Published in Business

Google and its operations in China have come under the spotlight in the past few days.

Billionaire investor Peter Thiel last week accused the U.S. technology giant of working with the Chinese military and called for the U.S. government to investigate Google. In response, President Donald Trump said his administration will “take a look” into Google.

The tech giant has denied working with the Chinese military.

Still, the controversy has sparked interest in what Google is doing in China. CNBC took a closer look at Google’s business dealings in China.

‘Project Dragonfly’

Google ended its search product in China in 2010 and is effectively blocked in the country. However, a report emerged last year that the search giant was looking to launch a censored version of its search app in China. The initiative, which the company acknowledged publicly, was in its early stages. In China, all internet services are required to censor information which the government deems sensitive.

However, Vice President for Government Affairs and Public Policy at the company, Karan Bhatia, said this week that Google had abandoned plans for “Project Dragonfly,” the name of its China search product initiative.

So right now, Google is still blocked in China and can only be accessed via a virtual private network (VPN), which helps mask a user’s internet location.

A.I. research

One of Thiel’s accusations is that Chinese spies have infiltrated Google’s artificial intelligence (AI) projects, but he did not provide any evidence.

Google does have AI projects in China though. In 2017, the company opened up an AI research center in China.

On its website, Google says AI research in China is focused on education and so-called natural language understanding — which refers to an AI technique focused on getting machines to understand human language. Google is looking to apply AI to auctioning so that the bidding process for ads can be more efficient. This could be important for Google, which operates an advertising marketplace.

In China, the work is also contributing to AI products that Google makes available globally, such as TensorFlow. This is an open source library that can help other companies develop AI products.

Cloud computing

Technology giants such as Alibaba and Tencent dominate the cloud market in China. So Google’s tactic is to try to sell its cloud products to Chinese firms that have international operations in Southeast Asia and elsewhere.

A search of Google job postings in China showed the company is looking for cloud computing engineers, data managers, sales and business development roles across Beijing, Shanghai and Shenzhen.

The company is also hiring people to target customers in specific industries — from media and entertainment to manufacturing.


Google sells a number of hardware products including smartphones, smart speakers and thermostats, under the Nest brand that it owns. Some of that is manufactured in China.

The company is currently advertising roles for engineers to test products and for manufacturing and supply chain managers. On LinkedIn, a number of Google employees in Shenzhen, a key technology hub in China, listed their jobs as hardware-related.

However, Bloomberg reported in June that Google was moving the production of some Nest thermostats and server hardware out of China to avoid tariffs from the U.S.

App developers and the Google Play Store
The Google Play Store, the company’s app store, is blocked in China. So Google is trying to work with app developers in China to help them bring their products onto the Play Store in international markets.

Under its job listings, Google advertised for two roles for a business development manager related to the play store.

“As a Business Development Manager of Google Play, you will empower developers to build successful businesses on Play/Android globally, and inspire the ecosystem to innovate on/invest in Android and Play,” the job description reads.

Google also has individual roles for the gaming section of the Google Play store. Games are a huge part of its app store.


Advertising is a core part of Google’s revenue but because its services are blocked in China, it can’t really sell ads on those platforms there. So the company focuses on Chinese businesses looking to advertise on Google platforms abroad, whether that is on its search engine, YouTube or something else.

One job that’s being advertised is for a business development consultant in Shanghai who will be “responsible for driving business growth and attracting new medium to large size advertisers for Google.” There are also people focused on getting advertisers from specific industries like retail or entertainment.

Overall, Google’s business in China is mostly aimed at getting Chinese companies to use its products outside of China.



Published in Telecoms
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