Kenyan Gamblers Receive Low Payouts As William Ruto's Fresh Taxes Begin To Bite

• Betting payouts have dropped to 72.8% or KSh 43.7 billion in the past year from a peak of 89.8% (KSh 269.3 billion) in 2019
• Total betting stakes also dropped to KSh 60 billion last year compared to the significant high of KSh 299.7 billion recorded in 2019
• Betting Control and Licensing Board attributes this decline to aggressive taxation regimes and stringent compliance measures

Elijah Ntongai, a journalist at TUKO.co.ke, leverages more than three years of expertise in financial, business, and technology research, providing profound insights into both Kenyan and global economic trends.

Betting firms in Kenya are paying out less staked amounts to gamblers, diminishing the prospects for punters to profit from their stakes due to strict regulations.

Data analysis from the Betting Control and Licensing Board (BCLB) reveals a notable decline in payout ratios, plummeting to 72.8% or KSh 43.7 billion in the past year from a peak of 89.8% (KSh 269.3 billion) in 2019.

The total betting stakes have also seen a substantial decrease, falling to KSh 60 billion last year compared to the significant high of KSh 299.7 billion recorded in 2019.

Taxation

According to a report by the Business Daily, the BCLB attributes this decline to aggressive taxation regimes and stringent compliance measures implemented to curb the growing betting craze in the country.

“Because the country was progressively becoming a (betting) nation, the severe compliance requirements put in place in 2019 to limit the (betting) habit explains the recent trends,” noted the betting regulator.

Effective July 1, 2021, the government implemented a 7.5% excise tax on betting stakes, supplementing the existing 20% withholding tax applied to each winning bet.

Subsequently, the excise tax on betting stakes was raised to 12.5% from July of the current year, intensifying the financial burden on gamblers.

In addition to the taxes imposed on gamblers, betting firms are currently subject to a 15% gross gaming revenue tax, calculated as turnover minus winnings paid out; furthermore, these firms are obligated to pay a corporate tax on their profits at a rate of 30%.

Impact on KRA

The decline in revenues for betting firms poses a setback to the Kenya Revenue Authority's endeavours to generate more income from the industry, considering the multitude of taxes imposed on these companies.

However, despite the intentional escalation of taxation aimed at discouraging betting, there is a persistent increase in the number of betting firms entering the Kenyan market.

“Despite these measures, Kenya's (betting) industry continues to grow as new players and games continuously enter the market,” BCLB noted as reported by Business Daily.

More taxes proposed

Betting firms and gamblers face increased taxation as the government endeavours to curb the betting trend, with the proposed (Betting) Control Bill of 2023 outlining new levies on firms and mandatory savings from each stake.

The bill suggests a 15% betting tax on a betting firm's gross gaming revenue, along with an additional 1% monthly levy on the same revenue, with a portion of the staked amount earmarked for savings to make betting less enticing if the bill is adopted.

Aviator betting game

In other related news, TUKO.co.ke observed a new betting game called Aviator, which has grown in popularity among young Kenyans.

The betting game was described by players who talked to TUKO.co.ke as highly addictive, having a severe impact on finances and mental health.

"I know some may have made some money there, but am telling you that is a zero sum game. I had around four thousand to use for upkeep for the rest of the month, and after I was introduced to this game, I lost it all in three days," said Kai, a student at Thika Technical Training Institute.