Gamblers hit by new taxes as government look to raise Sh11.4 billion

BETTING ILLUSTRATION

T

he push for a stable tax regime in the country will not happen soon, not for the betting sector at least.

Kenya’s betting industry is once again facing renewed turbulence following a proposed major tax overhaul that seeks to redefined how player earnings are taxed.

The Finance Act 2025 introduces a five per cent withholding tax on all withdrawals from betting and gaming wallets, a sweeping shift from the previous 20 per cent tax levied only on actual winnings.

Under the new law, the Kenya Revenue Authority (KRA) will tax every withdrawal from a betting account whether it represents profit or the player’s original stake.

The government expects the move to nearly double collections from the sector, from Sh 5.4 billion to Sh11.4 billion, according to the Budget Watch 2025 report by the Parliamentary Budget Office.

PBO however, warns that the new tax proposal has the risk of driving players away from formal betting platforms, as many casual and small-scale bettors might be discouraged by the prospect of losing part of their initial deposits even without making a profit.

“For example, if a player has deposited funds but decides to withdraw them without placing any bets, they could still face a five percent tax on that withdrawal, despite not earning any income,” reads the report.

“This lack of clarity and perceived unfairness could not only push players away from regulated platforms but also hurt industry growth and undermine the very revenue goals the government hopes to achieve.”

This essentially means that, for instance, even if a player deposits Sh1,000 and later withdraws it without placing a single bet, they would still lose Sh50 to the taxman.

This “blanket taxation,” as described in the report, is seen as a potential blow to Kenya’s fast-growing online gaming market, which has become a significant revenue source for mobile money operators and tech startups.

The Treasury maintains the new levy is designed to simplify enforcement and broaden the tax base, part of its wider drive to improve compliance and reduce leakages through digital monitoring.

 Yet, the Budget Watch 2025 cautions that the short-term revenue gain could come at the cost of long-term sustainability.

“The lack of clarity and perceived unfairness could hurt industry growth and undermine the very revenue goals the government hopes to achieve.”

“The number of active betting accounts will also serve as an indicator of whether players are abandoning formal platforms. In addition, any legal challenges filed in court against taxing withdrawals will be critical in determining the sustainability of this approach,” said PBO in the report.