Is Tanzania’s Sports Betting industry worth the cost?

How negative economic and social impact should make us reconsider the industry.

Tanzania Sports Betting Background:

• Tanzania Population: 58 Million People
• Youthful Population: 70% of Tanzanians are under the age of 24 (40.6M people)
• GDP (2016): $47.43 Billion
• The increase in mobile phone penetration and ease of betting through mobile money has led to a significant growth in the last few years.
• From 2014–2016, Tanzanian Sports Betting revenues grew 95%. (2016 : 12.1 Billion TSH or $5.4M).
• According to the Tanzania Gaming Board, between 2014–2016, the sports betting industry overtook the legacy casino industry by generating over 30B TSH in revenue.
• In Dar es Salaam, one is never more than a few kilometers away from a sports betting agent.

Check out this infographic from 2016 in Tanzania. This data has been well outdated with the SportsBetting growth in 2017.

About Me

I am passionate about financial inclusion and strongly believe that Tanzania can lead Sub-Saharan Africa in digital payments. Youth are critical to the growth of our country and the region.

I spend hours every week with Tanzania’s youth. I conducted extensive interviews through the human-centered product design process I inherited from Stanford Graduate School of Business, and I spent countless hours with youth collecting data for the World Bank.

I personally engaged over 18,000 youth over a total of 26 events spanning 173 days and 4 different regions (Arusha, Moshi, Dar es Salaam, and Mwanza). These youth were across the income spectrum, from the unemployed to those working at top banking & consulting firms in the country. I continue to spend hours with our youth weekly.

I have friends who work for Sports Betting companies in Tanzania and I respect them. I personally do not support betting, but I respect the industry. I debated writing this article, but my colleagues encouraged me to share my perspective.

What I have seen from the Sports Betting industry:

• Betting is addictive. First-timers are confident in their ability to control betting spending. However, peer pressure and the get-rich-quick appeal are proven psychological ingredients to serious addiction.
• The industry’s negative social impact hits lower-income earners the most. I recently visited a poorer village in rural Shinyanga and interviewed a man betting on his mobile phone. That very day, he had already borrowed betting money from 4 different people. His family does not approve of the betting, but his friend scored a jackpot a few months ago so this man keeps trying his luck.

• Tanzanians are borrowing money to bet, creating a credit crisis. One mother I interviewed in the Misungwi district near Mwanza said: “My husband and I used to fight at home about his spending money on beer. Now, it’s betting and it’s out of control: we already owe some of our neighbors money. I feel ashamed.” During a recent event of mine in Dar es Salaam, I asked the audience of about 400 people, “How many of you have tried Sports Betting?” Most hands went up. I then asked those who had borrowed gambling money to stand. About 85% of audience stood. One person even shared that he keeps borrowing from other friends in order to pay back earlier people he borrowed from.
• Betting stretches finances-and families. As addiction sets in, it becomes harder to appreciate the risks and consequences. The Misungwi mother I mentioned above talked about about how she always fights with her husband about his gambling spending. What began as harmless game with friends is now dividing their home.
• Heavy advertising campaigns lure youth. My daily commute to downtown Dar es Salaam is plastered with at least 30 sports betting ads. Many ads are in heavy youth traffic areas: bus stands, radio stations, newspapers, and so on. Betting ads are regularly promoted on Facebook feeds.

What about the government tax benefits from Sports Betting?

The Gaming Board of Tanzania announced a new tax on winnings for sports betting games beginning summer 2017. Gambling wins will be taxed at 18% minus the amount wagered.

This means significant tax benefits. According to an article by The Citizen, the revenue collected from sports betting in three years is enough to run the Ministry of Information, Culture, Arts and Sports through 2017–2018, a combined 28.2 billion TSH in operations costs. But what are the risks?

• Credit, mental health, and family crises among Tanzania’s working poor and youth. Betting groups and borrowing to bet pose significant concern in our collectivist culture.
• Dangerous underground sports betting, leading to an increase in theft, corruption, and violence.
• Cultural decline. Sports are supposed to bring many people together. After all, it is rare to go to the national stadium during a Simba vs. Yanga game and see empty seats! But betting drags our attention away from the game to our wallets, pitting us against one another.
• Sports corruption. We have seen teams in many countries get paid off to purposely lose games so that gamblers can score big. Will this lead to an increase in bribing and corruption in Tanzanian sports?
• Poor job creation and economic impact beyond taxes. How many of these Sports Betting companies are locally owned? Not many.
• The impact on Tanzania’s youth. What example are we setting for the 40 million young people under the age of 24? What future are we creating for them?

This all begs the question:

Do the tax benefits of the Sports Betting industry outweigh the immediate and long-term risks to Tanzania’s youth and families?

Dec 19th 2017 → Title: Tanzania of 1. Those who work hard vs. 2. Those who Bet. Photo Credit: Masoud Kipanya.

So what next? What am I doing about this?

I recognize my role as an influencer in the community especially amongst young people. I have taken and spent hours teaching and learning from young people in Tanzania. I’m a firm believer in understanding various viewpoints. I’m struggling watching my fellow Tanzanian people addicted to SportsBetting as a quick exit option or a ‘get rich fast’ solution.

As I said at the beginning, this is not a post to start a war with betting companies in Tanzania. I respect them and the industry. This is a post to express my economical concerns to where to protect or inform our fellow countrymen on what they may be getting into while engaging with SportsBetting. On one hand, I understand the economics and ‘benefits’ for government from the growing betting industry in Tanzania. However, at who’s expense and what cost for fellow Tanzanians? What about the potential credit crisis we may be creating? What about those people borrowing money to bet then failing to pay back? What about the potential cycle of depression that could be created with such an addiction? What about the next generation of young Tanzanians coming up? What influence or example are we showing them?