Kenya betting taxes set to more than double despite rate cuts

Kenya is set to more than double its betting tax collections in the 2025/2026 financial year, even after cutting taxes for punters, according to projections by the Parliament Budget Office (PBO).

The Finance Act 2025 reduced the excise duty on wagered amounts and the withholding tax on winnings to 5%, SiGMA reported. Despite this, the PBO estimates that the government will collect Sh11.4 billion ($88.3 million) from betting taxes, up from Sh5.4 billion ($41.8 million) previously.

The increase is attributed to changes in how gambling taxes are applied. Under the new law, the 5% tax applies not only to winnings but also to transfers between mobile-money accounts and betting wallets, regardless of whether a wager is placed.

“This new change is expected to increase revenue collection from Sh5.4 billion ($41.8 million) to Sh11.4 billion ($88.3 million),” the PBO said in its Budget Watch 2025 report. “Under the new tax measures, a ‘withdrawal’ refers to any amount of money a customer takes out of their betting or gaming wallet, regardless of whether it represents a profit or a return of their original stake,” the office added.

Previously, the Excise Duty Act imposed a 15% charge on wagers only when a bet was made, and winnings were taxed at 20%, excluding the original stake. Under the new system, both deposits and withdrawals are taxed, broadening the revenue base.

For example, transferring Sh100 ($0.77) from a mobile-money account to a betting wallet now attracts a Sh5 ($0.04) charge, and withdrawing the same amount incurs another Sh5 ($0.04) tax, regardless of wagering. A punter who deposits and withdraws Sh100 without betting would effectively pay Sh9.75 ($0.08) in cumulative taxes.

The changes have drawn mixed reactions. Analysts at KPMG noted that lower tax rates may benefit punters and encourage compliance, but also raise concerns about responsible gambling. “The reduction in excise duty may incentivize players, but policymakers must monitor gambling patterns to prevent addiction,” they said.

The PBO also warned that taxing both deposits and withdrawals could push some players to unregulated online platforms, potentially undermining revenue goals. Tracking active betting accounts will be key to evaluating the policy’s effectiveness.

The Kenya Revenue Authority (KRA) reported betting tax receipts of Sh5.7 billion for the fiscal year ending 30 June 2025, representing a 22% increase from the previous year. KRA has integrated its systems with local betting firms to monitor transactions in real time and reduce revenue leakages.

The shift from taxing winnings to taxing withdrawals marks a significant policy change. While the lower rates favor punters, the broader tax base—including all transactions—could help Kenya achieve the projected Sh11.4 billion ($88.3 million) in revenue, provided compliance and participation remain high.

The government now faces the challenge of balancing revenue generation with responsible gambling, a key factor in the success of the new system.

The amendment coincides with MPs’ proposals to raise the gambling age to 21 and set the minimum bet at KSH 50. The changes aim to curb youth gambling. “We discourage young people from engaging in it, because getting Ksh50 is a bit hard,” said Dagoretti North MP Beatrice Elachi.