Kenya: Changes to the sports betting turnover tax

The gambling industry has been a very successful enterprise in Kenya for many years, with 57% of adults admitting to having engaged in gambling behaviour at least once in their life, and 10% of those saying that they gamble on a weekly basis.

Kenya currently has the third largest gambling industry in Africa, behind only South Africa and Nigeria, and the majority of that comes from sports betting. 83% of those who have gambled in Kenya have placed a bet on a football match, with football by far being the most named sport of choice amongst gamblers. The frequency and size of bets tends to increase during tournaments like the World Cup or African Cup of Nations, but the majority of regular betters are content to place wagers on weekly league matches. After football, the next most popular gambling option was the lottery, with 11% of gamblers citing this as their top choice.

At the beginning of 2019, Kenya’s sports betting market was generating $218 million a month, which might go some way to explaining why the government decided to make the controversial decision to increase its turnover tax. Under the new rules, betting companies would be required to take a 20% reduction off the total amount of winnings paid back to those who placed bets – and this included their original stake. These taxes would then be paid to the government. The idea was to try and reduce the hold that the government felt that gambling had over its citizens.

While initially it looked like the government’s hard-ball stance was having the desired effect of limiting the industry, it soon became clear that the controversial tax was doing more harm than good.

The turnover tax sparked a mass outrage amongst gamblers and betting operators alike, with many threatening to protest outside government buildings. Two of the country’s largest betting agents, SportPesa and Betin, responding by immediately withdrawing their operations from the country. SportPesa, which had held a market share of two-thirds of the Kenyan gambling market, was forced to let 400 employees go, and also withdrew from all local sports sponsorship deals. And Kenyan citizens began to find other, unregulated places to place their bets, thereby threatening to swell the coffers of the overseas betting industry.

Football betting is by far the most popular type of gambling in Kenya and is favoured my most over online casinos.

Although online casinos are legal in Kenya, they are still much overlooked by gamblers who continue to prefer sports betting over games. By contrast, in the UK they are the most popular form of online gambling. Online slots games, online bingo, and online skills games like poker and blackjack see thousands of players win money every week. The online casinos are attractive to gamblers because they trust them to be well-regulated and licenced by the government, and the casino brands work hard to ensure their games and sites are high quality. If a similar environment could be nurtured in Kenya, then the government might be able to reap more of a reward from the gambling sector and would not have to rely on raising high taxes from the players.

While the turnaround tax is at the lower rate of 10%, gamblers in Kenya will be able to enjoy increased returns on their bets. Hopefully the industry will see a surge in profits that will encourage the government to reconsider their position and not raise the tax back to 20% next year.

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