10 firms join the battle for betting billions

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Ten new betting firms have been licensed to operate in Kenya, highlighting the growth of the industry despite increased taxation meant to tame the gambling craze in the country. The entry of the new players raises the number of betting firms cleared to operate in the country by the Betting Licensing and Control Board (BCLB) in the current financial year that ends in June 2024 to 71.

The growth of the industry has defied higher taxes meant to discourage the gambling craze, with Kenyans especially the unemployed youth seeing betting as an avenue for making money to pay daily bills rather than a past-time activity.

Betting stakes are currently taxed at the rate of 12.5 percent in addition to the 20 percent withholding tax.

The Treasury has attributed its recent decision to increase the excise tax on betting stakes from 7.5 percent to 12.5 percent to the need to discourage participation in gambling activities by Kenyans.

“To discourage participation in these activities by Kenyans and especially school-going children, I propose to the National Assembly to increase the rate of excise duty on betting, gaming, prize competition and lotteries from the current rate of 7.5 percent to 12.5 percent,”

– Treasury Cabinet Secretary Njuguna Ndung’u said.

Besides the taxes on gamblers, betting firms are taxed on the gross gaming revenue — turnover minus winnings paid out — at a rate of 15 percent. They also pay corporate tax on profits at a rate of 30 percent.

Excise tax on betting advertisements was from July 1 introduced at the rate of 15 percent in yet another push to make them costly and discourage them.

The 10 new entrants angling for a share of Kenya’s betting billions are 44bet, Savvybet, Tigonbet, Chapbet, Betmo, Play2Net, Clarity Limited, Betkali and Ealotto. SportPesa and Betika are the two top players in the market.

Kenyans placed a record Sh88.5 billion through online bets in the full year to June 2023.

The KRA collected Sh6.64 billion in excise taxes from betting in the year ended June, an increase from the Sh5.1 billion raised in the 2021/22 year.

Betting firms are required to compute betting taxes after midnight every day and remit the amounts to the KRA by 7am the following morning via pay bill numbers issued by the taxman.

The remittances cover excise duty, calculated at the rate of 7.5 percent of the amount wagered by punters and withholding tax on winnings, charged at the rate of 20 percent.

The Finance Act, of 2023 also made it compulsory for betting firms to remit excise duty on betting to the KRA within 24 hours upon the close of business day, as the State ups scrutiny on the firms.

“Excise duty on betting and gaming, offered through a platform or other medium, shall be remitted to the Commissioner by a bookmaker within twenty-four hours from the closure of transactions of the day,”

– says the Act that became law on July 1.

Source: businessdailyafrica.com