Kenya’s New Betting Tax Triggers Backlash and Industry Uncertainty

Kenya’s betting sector is facing strong criticism following the government’s decision to impose a 5% tax on all withdrawals from betting wallets, a key feature of the Finance Act 2025. The levy, which replaces the previous 20% tax on winnings, means gamblers now lose money even when they don’t profit—a change that has stirred anger among players and operators alike.

Blanket Taxation on All Withdrawals

The Kenya Revenue Authority (KRA) will now deduct 5% from every withdrawal, regardless of whether it includes winnings or simply a player’s own deposits. The shift marks a major departure from the previous regime that taxed only net gains.

According to the Parliamentary Budget Office (PBO), the government expects betting revenue to nearly double from $35 million to $74 million in the 2025/26 fiscal year. But the PBO warns the approach could alienate casual players and undermine confidence in Kenya’s rapidly growing online gaming market.

The office described the measure as a form of “blanket taxation” that risks pushing gamblers away from licensed platforms and back into unregulated channels.

Treasury Defends Policy as Simplification

The Treasury maintains that the reform is designed to simplify enforcement and enhance compliance. “This is part of a wider drive to improve compliance and reduce leakages through digital monitoring,” the ministry said in defense of the new rule.

Legal experts, however, see both advantages and drawbacks. David Sarinke of McKay Advocates noted, “Business Daily [recently] reported government betting tax revenues are projected to nearly double after the rate cuts. That strongly implies increased betting activity has already started to pick up following the Finance Act 2025 changes.”

Allan Mzungu of MMS Advocates agreed that the change strengthens oversight: “It broadens the tax base, since even people who deposit and later withdraw without [actively] betting are taxed, capturing far more users than before. It will surely ensure continuous cash flow to the Kenyan revenue authorities, as deposits and withdrawals occur daily.”

A New ‘Wallet-Flow’ Tax System

The new model, dubbed a “wallet-flow” taxation system, collects tax automatically through digital wallets rather than at the level of individual bets. This could see total gambling tax revenue climb from KSh5.4 billion to KSh11.4 billion in the next fiscal year.

Under the old regime, winners paid between 15% and 20% on their winnings. Now, every bettor pays 5% on both deposits and withdrawals. “This shift has created a cash-flow based tax model rather than a bet-outcome model,” Sarinke explained.

Kenya’s largest operator, SportPesa, reported that the average wallet balance per active user increased by KSh285 in August 2025—indicating that bettors may be holding funds longer to avoid repeated withdrawals.

Mzungu added that while players face taxes even without winning, their overall tax burden on winnings has dropped sharply. A player withdrawing KSh10,000 now pays KSh500 instead of up to KSh2,000 under the previous system—a 70% reduction.

The PBO cautioned that the perceived unfairness could discourage responsible betting and slow long-term industry growth. However, Mzungu remains optimistic: “If properly enforced and supported by responsible-gambling frameworks, the reform could stand as a model for digital tax policy in Africa, balancing fiscal innovation with behavioral insight.”

Source:

“Gamblers' outrage as Kenyan govt deducts 5% tax on all withdrawals from betting wallets”, africa.businessinsider.com. October 13, 2025