Gambling in Africa has increased enormously in recent years, so more and more gambling operators are looking to expand into the region. Kenya has seen some of the most significant growth. MPs in the country are under pressure from the industry to cut gambling taxes to less than half the current rate of 35%.
History of gambling in Kenya
Kenya is on the equator in the east of Africa and has a population in the region of 45 million. It is more economically advanced than the other central or eastern countries in the region. The economy is very reliant on tourism, which accounts for over 60% of their annual GDP.
Gambling first came up in Kenyan courts in 1966 when the Betting Lotteries and Gaming Act was introduced. This led to the creation of the Betting Control and Licensing Board, which oversees the sector and issues licenses.
There are now 11 bingo halls, three sportsbooks, one horse racing track, and 28 casinos in Kenya. Sports betting, poker, bingo, and lotteries are all operated by the state, which holds monopolies on these markets.
There have been moves to fully legalize online gambling in Kenya. The government does not block most offshore sites that offer services to Kenyan-based players, and some online sportsbooks have even been issued licenses recently.
Problem gambling in Kenya
With the recent increase in the popularity of gambling in Kenya, some have become concerned about the rising incidence of problem gambling.
More and more young people are turning to gambling, and many of them bet beyond their means daily. When they run out of funds, they often turn to crime to gain more gambling money. A lot of Kenyans now have mobile phones, so the popularity of online gambling has exploded.
It has never been easier for Kenyans to get their betting fix. As a result, a lot of them are knee-deep in debt and are constantly chasing their losses, which is indicative of a gambling addict.
A 2016 study found that almost 78% of university students in Kenya had a gambling problem. Kenya is behind only Nigeria and South Africa in the size of its gambling market. Gross revenue for the sector in 2016/2017 was almost $200m (£155m), which is around 50% of the country’s annual budget for health.
One way in which the government tried to curb problem gambling was by introducing a 35% tax on operators’ betting revenues. They have also talked about implementing a 20% tax on player winnings.
Potential lowering of taxes
The gambling industry has not been happy about the 35% tax on their gross revenue. They say that it negatively affects their ability to do business.
SportPesa, for example, ended all of its sponsorships of local sports teams and events for 2017 following this decision. The company has since re-entered into agreements with the country’s football leagues.
This 35% tax has been in place since the start of 2018, but now there are calls for it to be slashed to 15%. The decision to do so will depend on the Kenyan parliament.
The 35% tax rate was part of the 2017 Finance Bill. In addition to the 35% tax on revenues, the licensed operators have to pay a 30% corporation tax and make a 25% contribution to a variety of social causes. All of these taxes and levies add up significantly, so it is understandable why the industry is not happy.
In addition to the potential revenue cut, there have been talks about lowering the social cause’s contribution to 5%.
At the moment, Kenya is by far the costliest nation on the continent for gambling operators. Before the changes were made last year, various types of gambling were taxed differently. For example, there was a 5% tax for lotteries, a 7.5% tax for sports betting, and a 12% tax for casinos.
If the current regime makes proposed changes, there will be a universal tax rate of 15% for all of these activities.