Betting taxes to dip by Sh4 billion amid tough economic times
As the financial year progresses, the Kenyan betting sector faces a projected Sh4.2 billion decline in tax revenues. This downturn underscores a changing landscape for an industry that has managed to thrive despite significant taxation pressures in recent years. The Betting Control and Licensing Board (BCLB) has issued forecasts indicating that the government expects to collect Sh20 billion from gaming taxes, including excise duty on betting stakes and withholding taxes on winning bets. This figure represents a decrease from the Sh24.2 billion collected during the fiscal year that ended in June 2024.
Reasons behind the tax revenue decline
The anticipated reduction in tax income is primarily attributed to a noticeable decline in betting participation. Many players appear to be scaling back their spending, particularly following the government’s decision to raise excise duty on betting stakes from 12.5 percent to 15 percent. This tax increase has contributed to a shifting sentiment among bettors, making them increasingly cautious about their gambling activities.
“We are seeing a shift in consumer behaviour. Based on the most current data from the industry’s licensed operators and the comprehensive, multi-sectoral initiatives undertaken by the Board to protect Kenyans and preserve our social fabric,” said Jane Makau, chairperson of the BCLB board, in an official statement. “The sector is projected to generate Sh20 billion in 2025. This includes excise duty, withholding tax, and betting and gaming tax. It reflects robust but regulated growth.”
For every winning bet, players are subject to a 20 percent withholding tax, meaning that for every Sh1,000 won, Sh200 is remitted to the Kenya Revenue Authority (KRA). The strain of increased taxation may lead players to reconsider their bets, reducing overall industry performance and impacting tax revenues. High unemployment rates and a rising cost of living continue to push many individuals towards gambling as a potential solution to their financial woes. The industry has historically thrived on the hope that betting could provide a quick fix to everyday challenges. In the financial years 2023 and 2024, KRA collected Sh19.2 billion and Sh24.2 billion in betting taxes, respectively, indicating the extent of income generated from the sector even amid tax hikes.
Regulatory landscape and future implications
The decline in betting tax revenue also emerged during a period of rapid growth in the number of licensed betting firms, which now stands at 221—more than double the 100 registered in 2021. Currently, betting firms are responsible for remitting a 15 percent tax on their gross gaming revenue as well as a corporate tax of 30 percent on profits. This tax regimen is expected to remain in place, with firms required to submit their tax payments daily by 1 a.m.
Following this, the industry may soon face additional reforms. Online gambling firms and the national lottery could be required to deposit Sh200 million to secure operating licenses under the proposed legislation. These proposals are outlined in the Gambling Control Bill, 2023, which is currently waiting for President William Ruto’s signature.
The BCLB is optimistic that the passage of this Bill will enable tighter oversight of the gambling sector going forward. Dr Makau emphasised that stronger regulation is necessary to maintain the integrity of the industry and protect Kenyans. “The oversight is set to be strengthened by passing into law the Gambling Control Bill 2023, which is in the legislative process,” she stated.
As economic challenges persist, the future of betting revenues in Kenya remains uncertain. With new regulatory changes being implemented and shifting consumer behaviour, it will be important for stakeholders to adapt to these growing dynamics.
