Access Denied! Punters urged to cash out but 1XBet is already gone!

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Access Denied! Punters urged to cash out but 1XBet is already gone!
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“Access denied,” is what welcomes anyone who visits www.1xbet.ug, the URL of the website that carried the online gambling firm’s operations.

The message, accompanied by a vector of a padlock, tells a visitor, “This website is not available in your country.”

On Friday, the National Lottery and Gaming Regulatory Board urged bettors to immediately withdraw any funds they have with 1xBet after the betting company had notified them closure of business operations in Uganda.

“All punters are advised to withdraw their funds immediately and stop staking with the said gaming operator,” the lottery board said in a statement that was no different from filling water in a basket.

The board had still done its part, dusted its hands and scribbled a small epitaph on yet another tombstone of a gaming firm in the country.

1xBet’s exit from the Ugandan market follows that of Betway, a global gaming giant that sponsored several sports franchises in the country such as Express FC and basketball side Power before abruptly winding down its operations last year.

1xBet is an online gambling company licensed by Curaçao eGaming License. It was founded in 2007 and registered in Cyprus. In 2019, they experienced considerable growth, briefly sponsoring English Premier League giants Chelsea and Liverpool.

However, even with the growth, 1xBet’s operations in East Africa appear to have been facing a hit lately. The franchise operated a model unlike most conventional ones in the country, allowing betting on a variety of scales – including number of corner kicks or bookings during a game.

For punters with time for live gaming, such odds made 1xBet appealing.

“They had the most odds on a single game, you would be literally lost for choice and any serious bettor would have something to eat from them,” said a punter.

The signs that 1xBet were slipping into a hole were first revealed some 646km from Kampala when, in November 2022, Kenya’s The Star newspaper reported that a director of the gambling firm had threatened to sue and have its operations audited over nonpayment of his salaries.

Stephen Mungai Njoroge, then a minority shareholder at Advanced Gaming Limited, told a court in Nairobi that he had never been paid any remuneration, received dividends or been invited to an annual general meeting despite holding 10% shares in the company.

In a demand letter to the firm, Njoroge said he wanted to know whether the firm had been making profits or losses for the last eight years that it had been in operation.

 

Taxes, a huge toll

If bettors in Uganda had read into Njoroge’s legal threats, they would have dotted the Is and crossed the Ts on the epitaph long before the lottery board got the belated news of the closure of business.

On the surface, betting firms appear to be making windfalls. Every betting parlour is always teeming with bettors while their online sites gain the most hits or visits per day in the country.

But in a country where gaming companies were paying 15% on the stake and 15% on wins, the tax regime alone choked the line businesses. But the taxman was not yet done.

Last May, Parliament passed the Lotteries and Gaming (Amendment) Bill, 2023 that revised the existing tax of 20% to 30% for a gaming activity.

Schedule 4 of the existing law prescribes the rate of tax as 20% of the total amount of money staked, less the payouts/winnings, for the period of filing returns.

While presenting a report on the Bill on Thursday, May 4, 2023, the Deputy Chairperson of the Finance Committee, Ms Jane Pacutho said the 20% tax rate will be maintained on sports betting.

She added that there are multiple start and stop points within some games which make it hard to enforce the tax point for winnings, including punter sessions for games like roulettes, poker and slots.

“Consequently, casinos are instead using the end of day reconciliations to account for withholding tax which would only be on the days when they have made losses. Such an occurrence is highly unlikely for a casino because betting/gaming companies are always winning,” the committee said in a report.

“To plug this revenue leakage, the measure proposes to remove the 15% withholding tax on payments for winnings of gaming and instead increase the gaming tax to a rate of 30 per cent across the gaming sector,” Pacutho said.

The tax chokehold was tightened after President Museveni left nothing to chance about his government’s stance on gambling operations when, in 2019, he said international betting firms were unwelcome in Uganda.

While on the sidelines of the World Economic Forum in Davos, Museveni tweeted that the government would no longer register “new fully-owned foreign betting companies while the old ones will not have their licenses renewed.”

“All they do is accumulate money from Ugandans then ship it out of the country,” the President said in a January 24, 2019 tweet.

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