Has Kenya’s Ultra Aggressive Betting Taxes Had The Desired Effect?

Like the proverbial cat with nine lives, the Kenyan betting industry keeps rebounding strongly after being knocked down by the government’s stringent taxation policies.

The battle between gambling operators in Kenya and the tax authorities in the country has been a long, drawn out one, with the taxman consistently swinging from the hip, and landing several telling punches, but the industry continues to thrive despite those heavy hits.

The first significant battle year between the two parties was back in 2019, when the government embarked on a mission to seemingly wipe out the gambling industry.

Kenya clamped down on sports betting operators, accusing them of offences ranging from money laundering to tax evasion, and such was the heat being turned on that some of the biggest players in the industry – notably SportPesa and Betin exited the Kenyan market.

Since then, some decorum has been restored to the industry, but there remains this lingering tension between the warring parties.

While the battle has never really escalated to the scale of 2019, the Kenyan government has continued to throw jabs, and has landed the occasional knockout blow on some heavyweight operators. Betway and Betsafe are amongst the biggest names to have quit the Kenyan market in the last couple of years.

Going by the exits of these globally renowned brands, one would assume that the Kenyan market is an unworthy venture, but that assumption is countered by the influx of new companies on a yearly basis.

These big guns may have left, but the likes of 22Bet and Betika have picked up the pieces and are now leading the current set of sports betting operators serving the Kenyan market.

According to the Betting Control and Licensing Board (BCLB), there are now more than 100 betting companies operating in Kenya. If the industry was so unprofitable, surely these companies wouldn’t bother wasting their time?

Kenya’s betting taxes aren’t only targeted at the betting operators. The actual bettors have not been spared by the taxman. In fact, a major reason behind the aggressive taxes is to cut down the rate of sports betting in the country.

Bettors have to sacrifice 12.5% of their stake as excise tax, and if they manage to convert the stake to winning bets, they’d have to part with 20% of their winnings as withholding tax to the government.

There was talk of the excise tax being raised to 20%, but that’s off the table for now after the controversial Financial Bill 2024 wasn’t signed into law.

If these very high demands were meant to deter people from placing bets, they clearly have not worked, at least, according to data provided by the government.

In the full year leading up to June 2023, Kenyans wagered a record-breaking KSh. 88.5 billion, equating to a total daily spend of Ksh. 242 million.

The government may not have succeeded in slowing down the rate of sports betting, but they can at least take some satisfaction in the fact that the tax revenue collected from the industry is going up all the time.

The total money collected from betting taxes in the 2023-2024 financial year was Ksh. 24.2 billion, up from Ksh. 19.2 billion in the previous cycle. This amount covers all taxation channels, including the excise tax, withholding tax in winnings, and the 15% tax on gross earnings.

In the financial year leading up to June 2023, sports betting delivered KSh. 6.64 billion to the government in excise taxes alone. The excise tax was more than a billion shillings more than what had been collected in the previous year (Ksh. 5.1 billion in the 2021-2022 cycle). It was also well above the KSh 5.715bn that has been projected by the Kenyan Revenue Authority.

Kenya’s aggressive tax laws were always two-pronged – to discourage people from betting and to increase the revenue collected from the industry. Things look pretty good on the revenue front, but the laws have clearly had very little impact in their mission to slow down the betting rate.

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