Kenya’s Betting taxes fall below expectations

Licensing issues had a fiscal damaging impact on Kenya Revenue Authority’s hunt for gamblers’ billions– reporting less tax revenue from betting than expected.

Aggregated figures from the tax agency show that actual receipts from betting taxes for the year ended June 2022, stood at just Sh3.4Billion against Sh5.4billion the national treasury had set for KRA to raise from such levies.

This is after the treasury originally set a Sh 4.2 billion income target for collection by the taxman from gaming and betting firms before reviewing its estimates to Sh 1.2billion for the period owing to licensing requirements by the regulator.

Coupled with the impact of Covid-19 which saw certain firms either shift base or close shop, as well as the long-drawn-out court fight between the tax agency and betting company Sportpesa, meant that auditors at Times Tower managed just 63 percent in tax target, lower than the 148 percent target they achieved in a similar period last year.

In the year ended June 2021, KRA raised Sh 2.9Billion from betting taxes against a target revision of Sh2.02 billion, which is lower than the Sh3.7billion the treasury had originally hoped would accrue from such payments.

Betting tax is charged at the rate of 15 percent of the revenue generated from betting. The betting and gaming companies were required to deduct 20 percent tax from the winnings of the punters and remit this to the taxman.

Similarly, Kenya last year reintroduced excise duty on betting stakes to 7.5 percent, which means the government first takes Sh7.50 for every Sh100 a gambler places as a bet irrespective of winnings.

It also takes 20 percent on winnings and levies additional taxes on the betting firms in efforts meant to make gambling unattractive. Some of those tax sets had been opposed by the likes of Captain Ronald Karauri – the CEO of Sportpesa – now operated by Milestone Games.

The list of betting firms licensed for the year ending June published by the Betting and Licensing Control Board (BCLB) shows the number had increased to 100 from 76 in a similar period a year earlier—reflecting a 31.5 percent growth.

Each year, Kenyan punters lose hundreds of billions of Shillings to the gambling industry, underlining the money-spinning national love affair that has grown popular among males aged between 25 and 34 years.