Businessman Paul Wanderi Ndung’u has gone to court seeking to join a case that will determine the fate of key assets of gaming firm SportPesa including the trademark and web domains.
Mr Ndung’u wants to be admitted to represent the interest of Pevans East Africa in which he has a 17 percent stake that pioneered the sports gaming business in the country with the SportPesa brand.
The company ceased operations after losing its licence in 2019, partly due to allegations of non-payment of taxes that the Kenya Revenue Authority last computed at Sh95 billion.
The SportPesa brand returned on October 30, 2020, through Milestone Games Limited, which is owned by some of the shareholders of Pevans including Ronald Karauri.
Mr Karauri has an effective stake of 54.4 percent in Milestone and a seven percent interest in Pevans. The Betting Control and Licensing Board (BCLB) wrote to Milestone on the same day, prohibiting it from using the SportPesa tradename besides shortcodes and paybill numbers which the regulator said belonged to Pevans.
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Milestone went to court and obtained orders freezing the regulator’s directives as the case continues. The company argued that the regulator acted beyond its powers in issuing the directives. Mr Ndung’u, who is among the Pevans’ shareholders left out of the ownership of Milestone, says he is representing the interests of the former that risks losing out in the court case.
“The applicant will be greatly prejudiced if this matter is determined without his participation as the 4th interested party [Pevans] has opted to remain inert, yet the effect of the application before the court to assist the ex parte applicant’s illegal acquisition of the 4th interested party’s core assets,” said Gatheru Gathemia, the advocate representing Mr Ndung’u.
Justice Jairus Ngaah of the Milimani High Court directed that the application, filed on June 21, be mentioned before Hon Justice Ndungu on July 4.
The key assets are listed as the SportPesa trademark, websites bearing the same name, shortcodes 79079 and paybill numbers 9555700 and 955100.
SportPesa is the most popular gaming brand in the country, enjoying a loyal customer base of over 12 million. The brand was built through heavy marketing and sponsorship of sports by Pevans at a cost of more than Sh5 billion, Mr Ndung’u said in court papers.
Punters seamlessly resumed betting on the SportPesa platforms, indifferent to the ownership wrangles which do not appear to have affected the customer experience.
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The fallout among the sports betting pioneers is pitting a group led by Mr Karauri and Mr Ndung’u and Mrs Asenath Maina (who has a 21 percent stake in Pevans).
Besides being sidelined in the ownership of Milestone, the two entrepreneurs have also been diluted in the multinational Sportpesa Global Holdings Limited (SPGHL) which owns gaming subsidiaries in Tanzania and the United Kingdom among other markets.
At stake are billions of shillings in profits and dividends. Before the fallout, the partners pocketed dividends totalling Sh7.6 billion from Pevans in the four and a half years to June 2019. Over the same period, the company reported a cumulative profit of Sh12.9 billion.
By relaunching SportPesa under Milestone, the owners of the new venture effectively accessed the lucrative business while leaving behind the tax and regulatory troubles that brought down Pevans.
Mr Ndung’u says in an affidavit that Mr Karauri and Robert Macharia have interests in both Milestone and Pevans but have taken actions that are hurting the latter without disclosing their conflict of interest to the court.
He argues that Milestone has not been honest in its application, adding that he is convinced that Pevans has been placed in the proceedings “to wrongfully aid and abet the mala fides and illegalities being pursued by the two parties.”
While Pevans is listed as an interested party in the case, the company has not made arguments supporting or opposing Milestone’s objectives of barring the regulator from interfering with its business.
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Milestone was granted its prayers, protecting it from BCLB’s orders until the case is determined.
“The grant of leave herein shall operate as a stay of execution and implementation by the respondent (BCLB) and interested parties of the respondent’s decisions … pending the hearing and determination of the substantive judicial review application or until further orders by this court,” Justice Pauline Nyamweya ordered on November 16, 2020.