Kenya gaming: Tax on face value led to lower revenue, increased black market share

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The Kenyan government in 2019 introduced a controversial 20% blanket tax on betting and the gaming sector, described as a market killer by the Kenya Betting Control Board (BCB) and the major operators. Then market leaders Betin and SportsPea soon exited the market.

The Republic of Kenya is the forty-eighth largest country in the world by area. With almost 55 million residents as estimated in 2021 and the majority in age group less than 50 years, Kenya is the booming economy in the African continent. Kenya potentially is among the largest gaming markets in Africa.

Also read: India to impose GST at 28% on online gaming and casinos

Gambling operators in 2019 demanded the Kenyan Revenue Authority (KRA) explain the decision and justify why the turnover tax on gambling went from 10 per cent to 20 per cent without any explanation. The KRA subsequently suspended the licenses of 27 sports betting operators.

In 2020, the Kenyan Parliamentary Finance Committee noted that the higher rate had led to lower tax revenue, in part as a result of these market exits. It, therefore, proposed scrapping the tax entirely, a proposal that was accepted and signed into law by President Uhuru Kenyatta. Later modifications were done making the levy 7.5%. The Committee also said that the tax had increased player interest in the black market.

“Kenya had tried to impose a 20 per cent excise tax on bet value a few years back but had to roll it back as most of the international licensed operators exited operations and the revenue collection was not as per expectation. Even a 0.25 per cent excise tax on bet value imposed by the USA is considered high by most companies, so a 28 per cent tax on entry fee or bet value is almost like a killer blow,” Technology lawyer Jay Satya was quoted by Business World.  Kenya again rolled back to 20% tax applicable from July 1.