Abstract:
Organizational performance in the betting industry can be measured by the revenue
they generate. The betting companies in Kenya have been recording good
performance since 2015. For instance, in 2015, betting industry made Ksh. 2.1 billion,
this rose to Sh204 billion in 2018. However, the Kenyan government concern with
betting companies is on tax. In 2018, the betting industry made around Sh204 billion
but only remitted Sh4 billion in taxes. Moreover, most of the companies did not
submit the 20% withholding tax on payouts. Sportpesa, Betin and Betway who
together accounted for 85 percent of the market were accused of undercutting the tax
man and ordered to close operations immediately. Due to the issues between the
Government and betting companies over tax compliance issues, large betting firms in
Kenya halted their operations in Kenya owing to what it termed as a hostile operating
environment, with the taxation regime on the betting industry making the company’s
operations in the country unviable. Given the aforementioned, the general objective of
the study was to establish the perceived effect of tax policy on organizational
performance of gambling and lottery companies in Nairobi County, Kenya. Specific
objectives were; to establish the perceived effects of corporate tax, withholding tax
and betting tax on organizational performance of gambling and lottery companies in
Nairobi County. The study adopted an explanatory research design. The target
population was 250 senior managers and middle level managers from gambling and
lottery companies. Simple random sampling technique was utilized to choose the
respondents in sports betting companies. The study sample size was 154 managers.
Primary data was gathered by the use of structured questionnaires. Quantitative data
gathered was examined by use of descriptive statistics and inferential statistics and
presented as percentages, means, standard deviations and frequencies. A multiple
regression analysis was conducted to determine the effect of tax policy on
organizational performance of gambling and lottery companies in Nairobi County,
Kenya. The study found that perceived corporate tax had a negative significant
relationship with organizational performance (β = -0.467, P=0.003), perceived
withholding tax had a negative significant relationship with organizational
performance (β = -0.455, P = 0.003) and perceived betting tax had a negative
significant influence on organizational performance (β = -0.472, P = 0.002). The
study was important to betting and lottery companies. The companies would
comprehend the tax policy. They would be skilled to comply with the tax
requirements. The government assured the companies comply with the tax policy
through regular analysis. The study recommends that the government should consider
striking a balance between revenue generation goals of the government and
organizational goals of the gambling and lottery companies. The study recommends
that another study should be conducted on challenges facing gambling and lottery
companies in Kenya like regulations imposed on the firms, legislation and
competition.