Treasury moves to take 20pc of betting stakes
Gamblers will pay the government Sh20 for every Sh100 staked after the National Treasury proposed to increase excise tax on betting stakes to 20 percent, in the latest State onslaught to lower the appeal of betting.
The proposal is contained in the draft Finance Bill, 2024 and if adopted by Parliament will increase the tax from the current 12.5 percent.
The Bill is expected to be adopted by Cabinet and tabled in Parliament for debate and approval before the end of June. Currently, the government takes Sh12.50 from every Sh100 similar amount to be wagered.
“The first schedule to the excise duty Act is amended by deleting the words twelve-point five percent and substituting thereof the words twenty percent,” the National Treasury says in the draft Bill.
This is meant to lower the appeal of betting to millions of Kenyans, especially the youth and unemployed who have turned to gambling as a source of income.
The government has in recent years publicly pushed for increased taxes in a bid to curb the betting craze that has made Kenya home to the highest number of youthful gamblers at 76 percent, placing the country ahead of Nigeria and South Africa.
Adoption of the new tax rate will lower the amount that gamblers stake, in turn reducing the possible pay-out from a winning bet.
The 20 percent rate will be in addition to a similar rate charged as withholding tax on every winning bet that the State takes.
Betting firms are under law required to deduct the withholding tax and remit it to the Kenya Revenue Authority (KRA) by the 20th of the following month.
Besides gamblers, the State has also set its eyes on the betting firms and last year proposed two new taxes through the Gambling Control Bill, 2023 that has since been debated in Parliament.
These were the gambling tax which will be charged at the rate of 15 percent of a betting firm’s gross gaming revenue and a further one percent monthly levy on the same revenue.
But the National Assembly committee on Sports proposed reduction of gambling tax to 13 percent from 15 percent and removal of the one percent gambling tax in its report tabled before the House in December last year.
Increased taxation on the betting industry is bearing the desired impact at least in the eyes of the government. BCLB data shows that betting firms made Sh60 billion in revenue for the 2021/22 year, an 80 percent drop from Sh299 billion posted in the year to June 2019.
Data from the Betting Control and Licensing Board (BCLB) released last year shows that gamblers spend an average of Sh2,500 to bet every month with 80 percent of the winning punters earning less than Sh30,000 per month.
The Treasury has previously failed in bids to tax betting stakes at the rate of 20 per cent, after Parliament gave in to pressure from gaming firms and lowered the rate. The first time the Treasury proposed the 20 percent rate was in 2019.
Excise tax on betting stake was increased to the current 12.5 percent from 7.5 percent in July last year as the State raided the industry in a bid to take away the shine from the betting craze.
