A committee of the National Assembly has shot down a proposal by the Senate to impose two new taxes on betting firms, offering a temporary reprieve to a sector that has come under increased taxation as the government attempts to discourage both firms and gamblers.
The National Assembly Sports and Culture Committee rejected the Senate’s proposal to introduce betting and gaming tax, which were to be imposed on the gaming revenue of the firms, each at the rate of 15 percent.
Senators had proposed the two taxes in their review of the Gaming Control Bill, 2023 marking the latest push by the State to deter firms from the multi-billion-shilling local gambling market.
However, the National Assembly committee rejected the calls on the grounds that a Money Bill could only be introduced in the National Assembly in line with Article 109 (5) of the Constitution.
Imposition of the new levies would have significantly weighed down betting firms at a time when the sector is decrying ‘punitive’ taxation, which has seen several firms exit the local market and left scores of others at loggerheads with the Kenya Revenue Authority (KRA) over tax disputes.
But the over 200 licensed betting firms face anxious time given that the two taxes will be reviewed in the looming Finance Bill, which is set to be tabled in Parliament this month.
“Further, it was resolved that matters relating to taxation measures be withdrawn from the Bill pending the engagement of the Departmental Committee on Finance and the relevant stakeholders after which the same would be introduced through a subsequent Finance Bill,” the committee says in its report that is awaiting adoption by lawmakers.
The National Treasury is set to table the Finance Bill, 2025 ahead of the new financial year which starts in July.
Currently, betting firms pay a 15 percent tax on gross gaming revenue and a corporate tax of 30 percent on profits. The firms are required to remit the taxes every day by 1 am.
Gamblers on the other hand pay an excise tax of 15 percent on every betting stake and a further 20 percent withholding tax for every winning bet.
Betting firms have severally lost bids to throw out tax hikes proposed in the past. For example, the government hiked excise duty on betting stakes to 15 percent from 12.5 percent last year via the Tax Laws (Amendment) Act, 2024.
Several firms have exited the market in the past five years, citing the high taxation that they alleged significantly hit their businesses.
Betsafe exited the local market in May last year, becoming the latest to close shop after the high-profile exits of Betin and SportPesa in 2020.
Despite the increased taxation, the number of firms has been on a steady rise as the firms seek a share of the gambling past-time that has since turned into addiction for millions of Kenyans.
The latest list by the Betting Control and Licensing Board (BCLB) shows that some 221 firms are currently licensed to operate, more than double the 100 in 2021.
KRA has emerged as a big winner of the undeterred betting gambling craze, netting Sh12.47 billion from the sector in the eight months to February this year.
Betting firms are the other winners given that gamblers lose a vast chunk of the bets placed. But the lost bets do not put off punters as they increasingly stake more in the hope of winning.
A report by the Central Bank of Kenya shows that Kenyans spent an average of Sh1,825 on betting last year, with the country being home to the highest number of youthful gamblers on the continent, ahead of bigger economies like Nigeria and South Africa.
