Shock in Kenya as online casino and betting tax of 50% proposed

  • Treasury minister says move is needed to tackle ‘negative social effects’
  • Industry association claims the government has misunderstood its practices

The Kenyan government has hit the gambling industry with a straight 50% revenue tax proposal which would more than triple the current rate. For players, it is not a tax on winnings, which was tried in the nation in 2011, but proved unpopular.

Henry Rotich's shock 50% gambling tax announcement has riled some in Kenya
Kenyan treasury secretary Henry Rotich’s shock 50% betting tax announcement has riled some in Kenya

The current system is layered, with betting operators paying in 7.5% of revenue, lotteries submitting 5%, casino operators giving 12% and competitions offering 15% of revenues as taxes.

The Kenya Revenue Authority collected Sh4.7b ($46 million) in taxes from gambling in the year 2014/15. It expects to collect Sh3.4b ($33 million) in 2016/17.

Reasons for the rises

Announcing the rises, treasury secretary Henry Rotich said the move was needed as gambling had become widespread and its expansion was having negative social effects. Young people and the vulnerable were particularly affected, he believed.

The extra money raised would be put into a national fund to support sports, culture and the arts, explained the minister. The tax on revenues was preferable to a tax on winnings which had been unpopular when implemented and then rescinded in 2011, he added.

Industry group says government was ‘misinformed’

The local industry has been lobbying to hold off the threat of a tax rise for some time. The Association of Gaming Operators of Kenya (AGOK) in particular suggested the government was misinformed on industry practices and would risk killing off a growing industry.

Member of Parliament, Jakoyo Midiwo, introduced the amendment bill calling for a better method of regulating gambling services in Kenya.

Foreigners, should not be able to hold gambling licenses, he said, noting that Chinese and Bulgarian citizens were operating services illegally.

Despite growth, online casinos and betting in general in Kenya has faced challenges such as high fixed costs hitting profit margins and fierce competition. Operators have also struggled with weak regulation and an unclear tax policy.

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