A Closer Look at Kenya’s Tax on Gambling

More Changes to come on Online Sports Betting Taxes in Kenya

Online betting in Kenya and other developing countries can be a huge source of revenue. Experts across the industry caution, however, about balancing lucrative benefits from law-abiding taxpayers with measures that are too punitive and rebellion and underground wagering outfits.

The First Proposed Uniform Increase

In June 2017 President Uhuru Kenyatta signed the Tax Law (Amendment) Bill 2018, authorizing an increased tariff rise on all profits from legal gambling operators in the country – such as online betting and other landbased betting shops. Starting from 1 January, for every activity, they would be required to pay 35% to the government. This was a huge climb from the 7.5% that it was sitting at before and an increase like that will naturally have a huge impact on the gambling companies in the country of Kenya.

Betway, Betin and other bookmakers responsible for online betting in Kenya were so taken aback by the rises and concerned about maintaining their going concerns that there were rumors of closure for many of them. As well as simply suspending operations in Kenya, companies such as SportsPesa cut off all sponsorship deals and planned to take the matter to court. Online betting in Kenya has grown a lot in Kenya during the last years and many brands are becoming household names – and the best betting sites in Kenya will keep fighting.

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The response of the National Assembly Majority

After considerable distress and complaining from the entire community controlling legal online betting in Kenya, the Finance and National Planning Committee suggested that this tax is slashed to 15%, and that a 20% levy be imposed on the wins of all wagering activities. This 20% was initially introduced in 2016, and then suspended due to problems with its implementation.

Aden Duale, National Assembly Majority Leader, proposed both tariff changes to the Kenyan Parliament but was snagged when the Committee for Labour and Social Welfare withdrew gambling language from the 2018 Tax Laws (Amendment) Bill. Since part of the aim with these parts was to curb rampant problem gambling, this left everyone at something of an impasse.

Finance and National Planning Committee Step In

This body is authorized to review all tax amendments in Kenya, and chose to overrule the decision made by the Labour and Social Welfare Committee. The idea of a 20% cut seemed too much to impose all at once since this was the first time such taxation would be used and proposed that 10% be taken instead.

United Republic Party MP and Co-Chair of the Finance Committee, Joseph Kirui Limo, said that “the committee was of the view that 20 per cent is too high and hence the adoption of 10 per cent for both residents and non-residents”.

Thus, ultimately, a decision was reached by the Upper House to dock 10% of all lottery and wagering wins, as well as 15% of all operations. While no doubt still more than any of them would like to pay, the new tariffs are certainly much more palatable, and bettors can still benefit from the services offered by leading African betting sites.

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Final Approval is Still Required

The full National Assembly still needs to agree to the new levies, and President Kenyatta is still to sign the final Bill. As the government and the President have both been seen to want to get as much money as possible from betting sites.

The major concern here is that if the taxes remain too steep for legitimate operation, both for bettors and for gambling operators in Kenya, the dark world of black market wagering will grow dramatically. No regulation is possible here, which puts everyone at a considerably higher risk and, ultimately, means not everyone is paying money to the government anyway.

As mentioned prior, the line that needs to be walked here is fine. Payments must be high enough to ensure municipal profit, and low enough to make the entire community for online betting in Kenya feel like they are getting enough out of the deal. Time will tell whether the suggested amounts are the winning formula here.

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