Kenya Considers Raising Minimum Bet to 20 KES to Curb Youth Gambling

Kenya’s Betting Taxes Among the World’s Highest

Kenya imposes some of the world’s highest taxes on betting, prompting some bettors and operators to look for methods to bypass these tax rules. Before a betting company can operate in Kenya, it must first navigate through a rigorous licensing process, including application fees and licensing charges.

Once operational, these companies face substantial tax obligations. They are required to remit 15% of their gross gaming revenue to the Kenya Revenue Authority. This gross revenue is calculated as the total turnover minus payouts to winning customers.

Kenya imposes several other taxes on the betting industry. A 20% withholding tax is applied to all winnings, and there is an excise duty on stakes, currently set at 12.5%. However, recent legislative proposals have suggested increasing this excise duty to 20%.

Historical Changes in Tax Policies

The Kenyan government has repeatedly adjusted its tax policies concerning the betting industry. In 2019, an attempt to increase the excise duty to 20% was reversed by parliament in 2020 due to a significant drop in tax revenues. In 2021, the government proposed another hike to 20%, but settled on 7.5%, which was then increased to 12.5% in July 2023.

These tax policies directly affect bettors. For example, with the current excise duty, a bet of 1000 KES results in an actual stake of 875 KES after the excise tax is deducted. Additionally, any winnings are reduced by the 20% withholding tax, significantly impacting the net gain from betting activities.

Government’s Rationale Behind High Taxes

The Kenyan government’s stringent tax measures aim to curb the rapid growth of sports betting, particularly among the youth. Kenya has the highest rate of young gamblers in Sub-Saharan Africa, with a notable percentage of school-aged children engaging in betting activities. The government believes that higher taxes on stakes and winnings will make betting less attractive and reduce its prevalence among young people.

In its ongoing efforts to control gambling, Kenya is also considering raising the minimum bet amount to 20 KES. This move is part of a broader strategy to make betting less accessible to minors and school-aged children. While the primary focus is on preventing underage gambling, the government is also monitoring the rise of gambling among the adult population.

Rising Gambling Trends and Government Response in Kenya

Recent surveys indicate a significant increase in gambling activities among adults in Kenya, with a dramatic rise in participation from 1.9% in 2019 to 13.1% in 2021. Additionally, a majority of Kenyans have engaged in sports betting in the past year, highlighting the widespread nature of this activity.

In the year leading up to June 2023, Kenyans spent 88.5 billion KES on sports betting. Consequently, the Kenya Revenue Authority collected 6.64 billion KES in excise tax over the same period, an increase from the previous year.

The Kenyan government plans to use a portion of the increased tax revenues to establish rehabilitation centers and raise awareness about the negative consequences of gambling. These initiatives are part of a broader effort to promote responsible gambling and mitigate the social impacts of the industry’s rapid growth.