From KQ to SportPesa CEO & MP: Inside Ronald Karauri’s Embattled Rise

Capt. Ronald Karauri in recent weeks has been in the public eye as the first-time MP voiced his opinions on the four-day strike by pilots at national carrier Kenya Airways under the Kenya Airline Pilots Association (KALPA).

Karauri spent 11 years working for Kenya Airways as a Pilot, and, as a former Secretary General of KALPA, knows about the push and pull that KQ management regularly engages in with the pilots union. On the strike which according to KQ cost it at least Ksh300 million a day, Karauri has called for pilots’ demands to be taken seriously, and a clear plan for KQ’s recovery be provided before Parliament approves any new government bailouts for Kenya Airways.

The Kasarani MP, however, dismissed KALPA’s calls for the resignation of senior KQ management including CEO Allan Kilavuka and MP Michael Joseph. It has been an incredible, and embattled rise for Karauri, the son of former Tigania MP Mathew Adams Karauri, to become one of the most influential figures in business and politics.

The billions poured into advertising by SportPesa – the online sports bettíng company he led to prominence – made Karauri a media darling. Coupled with the company’s whirlwind success as it sponsored everyone from Everton and Southampton to the Kenyan Premier League and even the Racing Point F1 Team, you couldn’t ignore SportPesa.

But by becoming the public face of SportPesa, Karauri also became the starring character in the intrigues and sagas that revealed the murky world of politically-connected entrepreneurs, foreign investors, and regulators in the sector.

KQ

In his third year of studying Mechanical Engineering, Karauri dropped out to join KQ’s then brand new pilot trainee program. He took to it naturally, having been one of the top aviation students at Mang’u High School, where he took his secondary school exams in 1996.

He spent six years as a co-pilot and five as a captain of the Boeing 737, which was, at the time, the largest plane in Kenya Airways’ fleet.

KALPA

Karauri went into the world of trade unions with a stint as Secretary General of the Kenya Airline Pilots Association (KALPA). He states that during his time, they never went on strike as pilots but had several disputes with KQ management – on issues including the acquisition of specific planes by KQ which pilots felt were not suited for the African market.

SportPesa

An avid poker player, Karauri met Bulgarian Guerrasim Nikolov, the principal founder of SportPesa, at Finix Casino in Nairobi’s Hurlingam area. After getting to know each other over several games, Karauri would ditch his high-flying career to take on a new role as a shareholder and CEO of SportPesa – their new online sports betting venture, much to the shock of his family and friends.

The total initial investment in SportPesa was around Ksh500 million, with Karauri putting in Ksh30 million as he felt ‘it was worth the risk’.

“It was a tough decision. I remember trying to explain to my family and friends, they thought I was a mad man. I was now at the peak of my pilot’s career. But I was ready to take the leap of faith and to move to the other side,” he recalled in a past interview

Former Nairobi Mayor Dick Wathika helped the company take off as helped them navigate the regulatory and political environment in the early days, and brought in tycoon Paul Ndung’u, who invested around Ksh100 million for a 21 percent stake in Pevans EA, the holding company for SportPesa. Wathika, who had the SportPesa tussles take a toll on him, controversially died in December 2015 after rupturing an artery at Finix Casino, after a meeting with the Bulgarian investors, with questions raised including why the Bulgarians drove him to Karen Hospital 12 km away, with evening traffic, when Nairobi Hospital was only 6km away.

Regardless, SportPesa would go on to achieve unprecedented success. As court documents later revealed, the company posted a net profit of Ksh12.9 billion in Kenya between 2014 and 2019, earning shareholders including the CEO Karauri handsome dividends. It launched in 2014 and made a net profit of Ksh44.2 million that year. The earnings increased to Ksh1.6 billion the next year, and peaked at Ksh6.2 billion in 2016. The firm’s net income dropped to Ksh2 billion in 2017 and rose again to Ksh2.8 billion in 2018 – the last full year it before it lost its license for the first time, under pressure from the taxman.

A vicious government crackdown on the sector and, by extension, SportPesa, would follow and led to the company’s 2019 exit from Kenya. It discontinued its sponsorships of various teams and leagues it was sponsoring in the country, but continued to operate in other markets it had expanded to including Tanzania and South Africa.

Milestone Gaming & Fallout With Paul Ndung’u

In 2020, the SportPesa saga took another twist as the brand made a comeback in Kenya after a company controlled by Karauri, Milestone Gaming, had the brand, domain and paybills transferred to it in a deal with another of SportPesa’s global holding companies SGHL Ltd. This sparked a bitter fallout as Kenyan investors led by Paul Ndung’u and Asenath Wachira Maina accused Karauri of conspiring with the foreign investors to push them out of the company, and moved to court seeking to have Pevans EA declared as the owner of the SportPesa brand.

Ndung’u would also later claim that members of the family of former President Uhuru Kenyatta helped orchestrate a take-over of SportPesa with the issuing of a license to Milestone Gaming.

“The President had called me in front of eminent elders and said he will not allow bettíng into Kenya and that he will not allow Paul Ndung’u or anybody else to exploit the Kenyan citizens. He went ahead to say that our people are committing suícide, the young people are committing suícide, and that his family is against bettíng – which, through that intimidation in a meeting in State House, I had to accept what he said because he was the President,” Ndung’u claimed

“So today it pains me that as the former President he has allowed his family and members of his family to take over Sportpesa Limited whose brand was created by ordinary Kenyans who have worked hard to invest in the business and grow the business,” he continued.

The company’s operating license remains the subject of a protracted court battle. On 19^th September, High Court judge Anthony Ndung’u suspended a licence issued to Milestone by the Bettíng Control and Licensing Board (BCLB) allowing it to run SportPesa. Milestone has since filed an application for judicial review of the said decision.

READ MORE>>Karauri’s Fight for Billion-Dollar SportPesa Brand

Kasarani MP

Karauri successfully ran for the Kasarani MP seat as an independent after failing to clinch the Jubilee Party ticket. He defeated UDA’s John Kamau and Jubilee Party candidate Mercy Gakuya to clinch the seat.

Karauri bagged 32,046 votes. His closest rival, Kamau (UDA), got 30,044 while Gakuya (Jubilee) finished third with 24,790 votes.