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Betting firms cut winnings payout rates on tax squeeze
Besides a 15 percent excise duty on bets and 20 percent withholding tax on winnings by punters, the KRA also charges betting and gambling tax at the rate of 15 percent of gross gaming revenue — turnover less amount paid out on successful wagers.
Punters suffered a double-digit dip in winnings after staking about Sh75.18 billion on bets and games in nine months ended March 2025, pointing to the possibility of shrinking odds offered by bookmakers amid punitive taxation.
Data released by the Kenya Revenue Authority (KRA) shows that withheld taxes remitted by betting and gaming firms from payouts made to gamblers between July 2024 and March 2025 dropped to Sh4.81 billion from Sh5.65 billion a year earlier.
The amount wired to the taxman is equivalent to a 20 percent withholding tax on winnings. This means the total payouts retreated 14.87 percent to Sh24.07 billion from Sh28.27 billion in a similar period in the prior year.
Analysis of the KRA data shows that monthly withholding taxes on winnings fell year-on-year in seven of the nine review months since July 2024, with the exception being December with a growth of 18 percent and March 2.0 percent.
That largely contrasts with the excise duty deducted from the amount staked by the punters, which remained in growth territory throughout the review territory throughout the review period.
Calculations by the Business Daily using monthly duty remitted to the KRA indicate the amount staked in the betting and gambling industry climbed 17.04 percent to nearly Sh75.18 billion from Sh64.23 billion a year ago.
The duty on the amount wagered was 12.5 percent until last December before rising to 15 percent following the enforcement of the Tax Laws (Amendment) Act, 2024.
Consequently, the betting and gaming firms handed the KRA Sh9.98 billion in the nine months as excise duty, a 24.45 percent jump over Sh8.03 billion.
The popularity of betting has continued to rise amongst young people – employed as well as jobless — who see it as offering a game-like thrill besides an opportunity to make quick money despite punitive taxation on the activity.
Punters have over the years increased spending on betting in the hope of striking wins to foot daily bills or economically change their lives, defying the heavy taxes imposed on both betting stakes and winning bets.
Some gamblers fund their betting addiction through digital loans, while the growing number of jobless youth have turned to the craze in the hope of financial returns.
A high rate of unemployment and increased cost of living have been cited as key drivers of the betting craze over the years.
While a few punters get lucky and win large sums of money, the activity represents missed opportunities and losses for participants as a whole.
The KRA data, for instance, suggests that Kenyans placed an average of Sh274.37 million bets daily between July 2024 and March 2025, while winning Sh87.83 million.
Huge losses suffered in betting sessions have often resulted in some youthful punters taking their own lives, a development that has caught the attention of key State agencies — notably Parliament, Interior ministry as well as the Betting Control and Licensing Board (BCLB).
BCLB, for instance, suspended advertisements on betting, gaming, and lottery activities on all media platforms last Tuesday for 30 days to give room for further streamlining of rules guiding the operations of the industry, including scrutiny by the Kenya Film Classification Board (KFCB).
BCLB board Chair Jane Mwikali said the move followed growing suspicions that some firms were increasingly misrepresenting gambling as a legitimate investment opportunity and a shortcut to wealth creation.
“The erroneous depiction occasions adverse socioeconomic consequences, with devastating effects on individuals, families, and the broader community. Of particular concern is the rampant airing of gambling advertisements during the watershed period (5:00 am to 10:00 pm),” Dr Mwikali wrote in a press statement.
Besides a 15 percent excise duty on bets and 20 percent withholding tax on winnings by punters, the KRA also charges betting and gambling tax at the rate of 15 percent of gross gaming revenue — turnover less amount paid out on successful wagers.
KRA data shows taxes on gross revenue generated by betting and gaming firms wired Sh4.81 billion in the nine-month period ended March, increased from Sh3.39 billion the year before.
This means the betting firms generated Sh32.09 billion in the review period, a 41.89 percent jump from Sh22.61 billion.
The rise of betting defied a heavy crackdown on existing gaming firms and stiff taxation year after year.
In 2019, for instance, the Interior ministry under the then Cabinet Secretary Fred Matiang’i clamped down on gaming firms on allegations of criminal activity, including money laundering and tax evasion, in a battle that nearly wiped out the sector.
Taxes from the betting sector are projected to dip by Sh4.2 billion in the current financial year, underlining a slowdown in a craze that has for years braved a taxation onslaught.
The BCLB projects that the government will raise Sh20 billion in gaming taxes, excise duty on betting stakes, withholding tax on winning bets, and taxes on the firms, which will be a drop from the Sh24.2 billion raised in the year ended June 2024.
