Kenya’s gamble: Taxing tightrope walk for casino industry

The gambling industry in Kenya, which used to be a fun place to play games of chance, is now facing a precarious tightrope because of increasing taxes. The government’s plan to control gambling by imposing big taxes is putting pressure on gamers and businesses alike.

This is making people worry about whether the industry can keep going in the future. Such financial strain has lowered payouts and dissuaded some players from returning to their favorite games. Let’s take a look at the recent developments and open the conversation about whether this model will prove to be sustainable for the country and the gambling industry.

The government of Kenya has been making taxes higher for the gambling business bit by bit over time. In 2021, they started making people pay a 7.5% tax on the money they bet, and this went up to 12.5% in 2023. On top of that, gamblers have to give up 20% of their prize money as tax, which means they end up winning less money.

The planned law for controlling gambling in 2023, the so-called Gambling Control Bill, is going to put even more strain on betting companies’ balance sheets. It wants them to pay a tax of 15% on the total money made from gaming and also a charge of 1% every month. These new government rules are really changing things for the gambling industry.

The Betting Control and Licensing Board in Kenya (BCLB) says that there’s been a big drop in payouts given out compared to how much is bet, it fell from 89.8% in 2019 to just 72.8% lately. This dip means gamblers are getting to keep less of their winnings than before, which might make fewer people want to bet and could dull the shine of the whole gambling ecosystem.

Higher taxes mean that both gamblers and casinos are feeling the pinch on their wallets. Gamblers are getting less value for their money because they win less often, which might make them play less. This leads to fewer customers for casinos. If this happens, the government could end up making less money from taxes as well, leading to a bad cycle.

Casinos are under pressure too. The combination of different types of taxes, like excise duty and withholding tax, along with the suggested tax on total gambling earnings, really cuts into what they earn. These revenue problems could make casinos cut back on costs, which might affect how much they pay their workers or if they can spend money to make their businesses better. In the very worst cases, some casinos might even have to shut down.

Despite the fact that the government keeps increasing taxes, more and more casino sites are popping up in Kenya. There could be several reasons for this. To begin with, big gambling companies might be trying to make up for the money they’ve lost at their physical locations by getting more active online. Also, newcomers might think there’s still room for them to succeed quickly before things get worse. Regardless, there are some great bonuses to be found as a result.

But be warned: this increase in new casino websites may not last long. The high costs that these businesses have to deal with might make it hard for smaller sites to keep up, leading to them being taken over by the bigger ones. Plus, if the government manages to make gambling less tempting, fewer people might gamble, which would affect everyone in the business.

Kenya’s government isn’t wrong in wanting to make money from betting and casino games. But if they keep increasing taxes too much, it might cause problems. It could mean less money from taxes later on, people losing their jobs, and more unscrupulous businesses popping up. Kenya needs to find the right mix of taking in taxes and keeping the betting industry fair and under control so it can do well over time.

In the next steps, Kenya’s leaders should study how taxes on betting are affecting the overall economy. They should also talk openly with people who run these betting platforms and other groups that make sure gambling is done safely. By using facts and working together, Kenya can have a betting industry that is good for both the country and its people.

Kenya’s gambling industry is at a tipping point. It makes sense that the government wants to cut down on gambling by using taxes. Yet, they might be going too hard, putting the whole industry at risk of falling apart. It’s key to strike a fair balance with taxes, making sure people gamble safely and the industry thrives for Kenya’s betting prospects. Only time will tell what the future brings for Kenyan gambling enthusiasts and the businesses that serve them. Here’s hoping that everyone can work together to find the proper balance.

Source: the-star.co.ke

About Post Author