On July 1, 2023, Kenya’s government announced a milestone change in the taxation setting by increasing the existing 7.5% tax to 12.5%.
Recent History of Kenya’s Stake Taxation
Njuguna Ndungu, National Treasury Cabinet Secretary, explained that the financial maneuver focuses on fighting against underage betting among Kenyan students. He also spent a speech on the addictiveness of gaming and betting and their detrimental social consequences on families and, in general, on the country’s youth. This stake tax decision has been controversial for the government, which decided to double the tax rate from 10% to 20% in 2019.
On the other hand, this decision provoked a decrease in tax revenue, partially resulting from a market exit trend. Thus, the National Treasury CS Ukur Yatani reintroduced the tax in 2021. The same year, the government fixed the excise duty at 20% of the income from stakes and betting activities.
However, the Finance Committee reduced the stake levy to 7.5% for the following fiscal year, 2022. The stake tax history in Kenya looks controversial and complicated, with governments trying to face the gambling problem without coming up with a strong and resolutive decision.
Kenya is Fighting Against Illegal Gambling
The challenges behind the gambling issue revolve around the presence of an underworld market of unlicensed gambling venues and underage gambling among school-aged kids. Many Kenyan gamblers try to bypass the problem by playing at online verified and licensed casinos. The benefits of playing online rather than in a traditional venue are multiple: from free spins to no deposit bonus on this website, from new game releases to 24/7 customer assistance, the internet offers plenty of opportunities to experience an enjoyable casino adventure. These features of the online gambling market explain the migratory flux of gamblers from land-based venues to digital casinos and betting sites.
However, the online presence of betting sites adds some more concerns to the gambling issue in the country. The latest tax increase is the consequence of the diffused trend among Kenyan operators to fail to comply with licensing requirements. Thus, operators are the main concern for the government that designed the new tax to enhance fines for operators who aren’t licensed and allow children to entertain with betting or other gambling activities.
What Does the Gambling Control Bill Change?
The bill also includes fines for gamblers who bet less than KES20 and operators offering stakes below the same amount. Finally, radio and TV stations are prohibited from broadcasting gambling advertisements between 6 am and 10 pm.
The Gambling Control Bill requires licensed operators to own at least 30% of shares held by national citizens. Another significant requirement is that all operators will have to process transactions through locally registered banks after depositing a bank guarantee or insurance security bond as coverage for unlicensed gambling services. Kenyan casino operators, lottery organizations, and sports betting entities will have to deposit KES20 million.
Meanwhile, the new Gambling Authority will collect the money from the licensing of all lotteries for donations and charity initiatives. The Authority will address at least 30% of the income from the licensing process to charity causes based on the association or purpose sponsored by the lottery company.
