Kenya’s New Gambling Tax Threatens the Entire Industry

Kenya enrage domestic operators by proposing incredibly high tax rate.

Gambling industry in Kenya is in shambles, after the latest announcement from the government regarding the tax rates.

The current fiscal budget will include a new 50% tax, which came as a serious blow to the country’s gambling operators.

An Unfair Increase

Up until now, they were paying a 7,5% tax on their gambling revenue. This will drastically change, because apart from the new gambling tax, they will have to pay a 30% corporation tax on their net income. In total, this means an effective rate of staggering 70%!

The government’s proposal has been deemed not only unfair, but highly discriminatory, since the tax rise won’t include other industries. The officials claim these measures are implemented to discourage people from gambling, but many doubt this is true since the taxes on gambling winnings didn’t change.

According to market specialists, this moves the players towards operators based outside of Kenya. The reason is simple – the higher taxes mean higher prices in domestic casinos. However, the government’s proposal is likely to be amended before the actual adoption.

Some members of the Parliament suggested a reasonable tax change, so there could still be room for compromise.

The Problem

In the meantime, those in favour of such drastic tax increase are pointing to the latest survey, which shows a real betting epidemic among the nation’s youth – with the rate of 54% being the highest in the region of Sub-Saharan Africa.

The survey shows Kenyan youth bet more on a monthly basis and spend more money than their peers in other African countries. The young Kenyans prefer betting on football and almost exclusively do so using their mobile phones. With 96% of all bets made via mobile, Kenya has outscored even South Africa, the country with the highest rate of mobile penetration of the continent.

It is obvious this issue has to be dealt with. But many are wondering whether this is the right approach. As one analyst noticed, when taxes on alcohol go up, people just turn to drinking whatever they find, no matter the quality. We’re sure this story will have a follow-up soon.