What New Tax Law Means For Kenya’s Online Betting Industry

Sports betting operators in Kenya have been in a seemingly unending battle with Kenyan authorities in the last couple of years, but tensions between the parties may just be easing up a bit.

The major point of dispute between the operators and the authorities are the tax laws in the country, with some of the biggest players in the industry quitting the country as a consequence.

Sports betting heavyweights, SportPesa were amongst the biggest casualties, halting their operations in Kenya in September 2019.

SportPesa was particularly disappointed with the tax rate on betting stakes, which was increased from 10% to 20%. They accused the Kenyan treasury of a lack of understanding of how revenue generation works in the bookmaker industry, vowing not to return until a less hostile regulatory environment is restored in Kenya.

Before SportPesa announced its departure from the Kenyan market in September 2019, it had had its license revoked, along with the licenses of 26 other betting operators.

According to the Betting Control and Licensing Board (BCLB), the body in charge of sports betting in Kenya, the 27 operators owed a total of KES 60.56 billion in unpaid taxes.

The BCLB argued that a 20% tax on player winnings applied to both the profit and the bettor’s stake, and subsequently ordered telecoms provider Safaricom to suspend M-Pesa pay bills and SMS shortcodes for the 27 betting firms.

The tax merry-go-round hit a fever pitch over the last 12 months when the government initially agreed to remove the 20% excise tax on betting stakes, before doing a complete U-turn less than a year later in May 2021.

In the midst of all of that, Kenyan president, Uhuru Kenyatta had proposed a total ban on gambling activities in the country.

Kenya’s stance on sports betting has generally been a very hard one, but the latest development suggests that the warring parties may be about to strike a compromise.

The Kenyan Finance Committee proposed in June that the controversial excise tax should be cut from 20% to 7.5% after hearing arguments from stakeholders, including SportPesa.

Before the recommendation of the Finance Committee can be passed into law, it must pass through the Kenyan National Assembly, before the final approval from President Kenyatta.

While some betting operators like SportPesa continue to face off with Kenyan authorities, other bookmakers have taken advantage of the opening and established themselves as the best betting sites in Kenya in the past year.

Kenya has one of the biggest betting markets in Africa, but the industry should be much bigger than it currently is. The growth of online betting in Kenya has been held back by unfavorable government laws and a generally hostile environment.

Not only did big guns like SportPesa halt operations in Kenya for lengthy periods, new betting companies were also reluctant to step into the country given the ongoing disputes.

The government has also missed out on potential revenue that could have been generated by a booming betting industry.

It is important to regulate the online betting market in Kenya, but not to the point of grinding the industry into the ground.

Hopefully, the government and operators will reach a long-term compromise sooner rather than later.