Hefty taxes await betting firms under new law

Tougher times await betting firms as the government seeks to tighten the law authorizing their operations.

This follows efforts by MPs to pass a law enhancing taxes charged on gaming firms “with a view to making it hard to run one.”

The Gaming Bill, 2019, sponsored by Machakos Town MP Victor Munyaka is due for the third reading and may come to effect by end of February.

Debate on the Bill's report by the Sports, Culture, and Tourism Committee, chaired by the Machakos Town MP, concluded before MPs went on recess.

The Bill is set to repeal the Betting, Lotteries and Gaming Act which was enacted in 1966 on grounds the existing law is outdated.

If passed, the law will also restrict access to foreign gaming servers by Kenyans with a view to minimizing the capital flight from the Kenyan economy to offshore economies.

At the moment, firms operating public gaming (casinos) pay Sh1 million application fee, Sh3 million licence fee, Sh500,000 annual licence; Sh25,000 for licence renewal, Sh250,000 investigation fee for local firms and Sh1 million for foreign firms.

Gaming firms also pay betting tax, withholding tax on winnings, corporate tax, withholding tax, and withholding VAT.

But in the report, MPs have recommended further tax measures – some proposed in public participation forums across the country.

The law would see betting firms and agencies bleed more cash from their coffers to meet the government’s tax demands.

Betting firms will, therefore, pay gaming levy at one per cent of total monthly revenue, money which must be paid by 20th of every month.

Failure to pay the tax would cost a betting firm a further Sh200,000 fine to fund the National Gaming Authority.

Online gaming will attract security fees of Sh200 million, lottery (Sh200 million), non-online bookmakers (Sh30 million) and totalisator (Sh10 million).

Those running prize competitions are proposed to pay fees amounting to Sh20 million while non-online casinos will fetch taxpayers Sh100 million.

MPs have also proposed that the entities’ renewal fees be reduced to a cycle of one year, a step that translates to higher costs.

For instance, online gaming renewal fees was pegged at Sh30 million every three years but that is proposed to be Sh15 million per year.

Non-online bookmarkers will part with Sh5 million instead of the earlier proposal for the same amount in a three-year cycle.

Totalisators – number bets - will attract a renewal fee of Sh1 million per year while prize competition will be charged at Sh500,000.

Entities dealing with non-online gaming will pay Sh3 million in renewal fees with amusement prizes getting authority on a Sh500,000 charge.

Companies’ premises licences will be renewed at Sh3 million every year with casinos proposed to pay Sh50 million in gaming security fees.

There is also a proposal to create the Gaming Authority – a state agency with powers to prosecute any offences related to betting.  

“An officer duly authorized in writing by the Authority may conduct prosecution of any offence under this Act,” the report reads.

The authority will have powers to conduct security checks, vetting and due diligence in respect of gaming activities.

It will also conduct investigations to enforce the Act, pursue returns, handle complaints against licensees and impose penalties.

It is proposed to have a chairperson nominated by the Cabinet Secretary and appointed by the President

Other members would be the Principal Secretary Sports or a representative designated in writing; PSs Interior, National Treasury and ICT.

The Sports Cabinet Secretary shall also appoint to the authority three persons with a recognized degree in a relevant field.

The Council of Governors will have one slot while the director general shall be an ex officio member and secretary to the board.

The Sports committee has also recommended the establishment of a Gaming Appeals Committee in place of the Gaming Tribunal.

“Any person aggrieved by a decision of the board may, within twenty-one days from the date of making of the decision, appeal to the committee,” the amendment reads.

“The proposed committee will ensure there is an expeditious resolution of disputes. It will be less costly to operate as it will be meeting on as-needed basis,” Munyaka’s team said.

In what may be the relief for the firms, the committee has proposed to reduce license fees charged on betting firms – mostly by half.

All forms of online gaming will be charged Sh50 million; casinos (Sh10 million); non-online bookmarkers (Sh20 million); totalisator (Sh5 million); prize competition (Sh10 million); and private lotteries (Sh15 million).

Also proposed in the Bill is a Gaming Appeals Tribunal – an appellate jurisdiction for persons or betting companies dissatisfied with a decision of the Betting Control and Licensing Board.

“An appeal to the Tribunal shall operate as a stay of the decision of the Board until the appeal is heard and determined,” the proposed law suggests.

The tribunal shall consist of a chairperson and four members appointed by the Judicial Service Commission.

Upon appeal, the tribunal may confirm, set aside or vary the decision or an act in question and may make such other order as it considers appropriate.