Njoki Chege rubbished betting out of ignorance – Here is the economics of betting

Njoki Chege was way off

Njoki Chege wrote a scathing article in the Daily Nation attacking those who engage in betting activities, stating that “betting is for broke half-wits swimming in debt”. To the poor men and women that find betting a fun activity, Njoki Chege had some unkind words for them. She called them “pathetic little boys”, “dunderheads”, “losers”, “timid”, “lazy fools”, and “ditzy morons”. According to Njoki Chege, ” boys who place bets are not only financially poor, but also intellectually bankrupt”. She is very wrong, way too off.

Establishment of Sports Betting in Kenya

I will assume that my readers are aware of the definition of betting and its practice in Kenya, more so because we have had several betting opportunities spearheaded by major companies like Safaricom, Supermarkets, and Fuel Stations. Betting in sports is as old as sports itself but in the last few years especially after the coming of Sportspesa, mCheza and the numerous other sports betting institutions, betting has become a mainstream activity in Kenya.

Having assumed that my readers are aware of the definition of betting and and its practice in Kenya, I want to bring to your attention that betting is very popular today because the Government proactively promoted the establishment and development of betting and specifically sports betting since Jubilee took power in 2013. In the Jubilee Manifesto, we have a commitment by Jubilee Coalition to “establish a National Lottery Scheme, boosted by National budget allocations to fund and support professionalization of local sporting leagues across the major sporting disciplines”. Deputy President specifically mentioned Sportpesa as one the institutions that have provided jobs to the youth due to the Government’s intervention in sports betting.

Economic Significance of Sports Betting to Nations

Jubilee economists who came up with betting as an avenue for job creation to the youth were not the “intellectually bankrupt” types, but were people who have been informed by the success of gambling and sports betting in particular in other jurisdictions like Canada and the US. In the US for example, in the 1990s, the betting wager in sports was well over $300 billion, with betting institutions taking home more than 8% of the cash – from where the government obtained additional revenue in form of taxes and licenses.

When properly regulated, betting institutions should not retain more than 10% of the betting wager (the money everyone uses to bet), and that way more than 90% of monies collected in betting goes back to those practicing the betting in form of wins. That means the statement by Njoki Chege to the effect that “The proprietors make more money in a day than the Sh23 million they offer you as jackpots” is far from true, and her reference to Investopedia’s explanation of betting is grossly misunderstood.

What opponents of betting have cited as the reason to discourage betting is the fact that there seem to be no new monies, goods or services created by the betting industry. They contend that when an individual “earns” from betting, that money did not arise from an economic activity, but that the money was simply transferred from an already created wealth. However, these betting opponents have been rectified by analogies from sports, music, film and other entertainment sectors. For example, when two soccer teams meet in a stadium to play a game, and their fans spend money in transport, food and gate charges to go and watch them, the teams will earn money collected from the fans yet in the real physical sense there is no economic activity that has been created by that particular match. On the contrary, we know in certain terms that sporting is a strong driver of economic growth and GDP. The same argument applies to those who spend time to watch movies in theatres or attend music concerts and parties.

Economic Advantages of Betting to Betting Participants

It seems Njoki Chege did not have issues with the institutions that offer opportunities to the public to bet, but her issues were with those who practice betting. What she fails to understand is that betting belongs to the gaming sector e.g. video games which in turn belongs to the sporting sector which in turn belongs to the Entertainment Industry. Just as a gamer who wastes time (or money) chasing cars in a video game, just as those kids willing to part with shs 10 to shs 100 in order to participate in a game of soccer in a videogame bureau, and just like Njoki Chege would find satisfaction (utility) after spending shs 1,500 to watch a Hollywood blockbuster at iMax, those who engage in betting also derive satisfaction or economic utility from the betting activity.

Sports betting that Kenyans have taken up en masse also has mental advantages. Studies have shown that video games improve cognitive abilities including problem solving, enhance brain-body coordination, spatial coordination, language skills, improved IQ, prevention of mental diseases like dementia, increased creativity, improved memory, better concentration, and ability to develop planning and task execution skills. Practicing knowledge based sports betting also endows participants with general and specific knowledge about sporting and the participating teams. In Nairobi I witnessed a lady purchase a shs 1,200 soccer book with the aim of improving her soccer knowledge, so that she could stand a better chance of winning a sportspesa bet. The betting participants also develop innate ability to calculate risk and appreciate probabilistic situations.

I must mention that as any other gaming activity, betting is equally addictive. The addictiveness of gaming (I am personally addicted to Chess) does not mean that we should ban the entire gaming industry. If addictive activities were to banned based on the fact that people get addicted to them, then alcohol, cigarettes, shisha, sex, love, food, and any other addictive activity ought to be banned. If those who practice betting are “intellectually bankrupt”, then those who drink, play games, listen to music, or smoke are no better.

It is also important for me to say this to those who engage in betting as an occupation – it is possible to derive a decent income from betting every month but you have to be smart, very smart and extremely knowledgeable. A betting individual is not any different from someone who on a daily basis engages in the buying and selling of stock in a stock market like the Nairobi Security Exchange, or a person involved in the speculative trade of money in different world currencies. In the long run, these people normally tend to make decent income, but they usually calculate their risks very carefully but at times they end up losing millions of shillings in bad performing stocks.

Conclusion

In conclusion, betting is important to the overall economy as governments are able to gain extra revenue from tax collected from betting institutions, and when such betting institutions are encouraged to offer financial support back to the sporting industry, the sporting industry grows. In Kenya we are aware that Sportspesa is currently sponsoring the Kenya Premier League and has committed itself to sponsor Gor Mahia for the next five years. Kenya Premier League and Gor Mahia fans can thus practice betting in Sportspesa knowing that part of the money they use in the betting platform will end up growing those two soccer institutions.