Key Moments:
- Kenya projects its annual betting tax collections to rise from Sh5.4 billion ($41.8 million) to Sh11.4 billion ($88.3 million) in the 2025/2026 financial year.
- The Finance Act 2025 reduced excise and withholding taxes on betting transactions to 5%, shifting the tax base to deposits and withdrawals.
- KRA has reported a 22% growth in betting tax receipts, reaching Sh5.7 billion for the fiscal year ending 30 June 2025, aided by real-time oversight systems.
Taxation Overhaul Drives Revenue Growth
Kenya has set the stage for a substantial increase in betting-related tax revenue, with projections indicating more than double the collections for the 2025/2026 fiscal year compared to previous periods. The Finance Act 2025 has revised the tax landscape for the sector, notably bringing excise duty on wagered amounts and withholding tax on winnings down to 5%. Despite this reduction, the shift in how taxes apply to betting transactions positions the government to secure a much larger share of gambling-generated income.
New Approach to Betting Transaction Taxes
Under the updated law, Kenyan bettors face a 5% tax when transferring money from mobile accounts to betting wallets and vice versa, regardless of wager activity. This change means every deposit and withdrawal involving betting wallets is subject to the tax, not just net winnings. The Parliament Budget Office (PBO) reported this move is anticipated to elevate betting tax collections to Sh11.4 billion ($88.3 million) per year.
| Transaction Type | Amount | Tax Applied |
|---|---|---|
| Deposit from Mobile-Money to Betting Wallet | Sh100 ($0.07) | Sh5 ($0.04) |
| Withdrawal from Betting Wallet to Mobile-Money | Sh100 ($0.07) | Sh5 ($0.04) |
From Wager-Based Levy to Withdrawal-Based Taxation
Previously, punters were subject to a 15% excise charge on the amount wagered when placing bets, with winnings incurring a 20% withholding tax that excluded the initial stake. The new regime applies a 5% tax at both the deposit and withdrawal stages, taxing the total amount moved into or out of betting wallets. This change means that bettors pay tax even without making a wager, and cumulative losses can reach Sh9.75 ($0.08) on every Sh100 ($0.77) deposited and withdrawn without any betting activity.
Implications for Bettors and Industry
Industry observers have highlighted that while lower rates appear advantageous for punters, the increased frequency and scope of taxed transactions might lead to higher overall costs for frequent bettors. KPMG analysts recognized the reduction in duty as an incentive for the sector but raised concerns on responsible gambling, saying, “Reduction of excise duty rates on gaming and betting is a plus for punters in the betting and gaming sector and may be viewed as an incentive for players in this sector.” They further cautioned, “However, the reduction in the rate may also bring into context issues around responsible gambling and betting.”
The PBO also flagged potential risks of the new approach: “The new tax on withdrawals has the potential to raise government revenue significantly, but it also risks discouraging participation by taxing both winnings and the original stake,” with a further warning about possible migration to unregulated betting platforms. They emphasized, “It will be important to keep an eye on revenue collection trends to see if the projected increase from Sh5.4 billion ($41.8 million) to Sh11.4 billion ($88.3 million) is achieved.”
Regulatory and Revenue Oversight
According to the Kenya Revenue Authority (KRA), betting tax receipts climbed to Sh5.7 billion in the fiscal year ending 30 June 2025, marking a 22% increase over the prior year. Integrating KRA systems with those of betting operators has enhanced real-time visibility, ensuring greater compliance and reducing revenue leakages. This technological improvement supports the government’s goal of meeting ambitious tax targets.
Conclusion and Forward Outlook
The transition from taxing winnings to taxing nearly all betting-related financial transactions signifies a pivotal shift in Kenya’s gambling tax policy. While lower rates and broad implementation may drive substantial government revenue, the scheme’s success will hinge on compliance, responsible gambling behavior, and effective regulatory oversight.
- Author
Daniel Williams
