Kenya has the highest number of gambling youth in Sub-Saharan Africa, with sports betting being the most popular form of gambling in the country. So far, the tax revenue authority has been receiving $27 million as monthly tax revenues from Kenyans’ gambling habits but not anymore; pending the hearing of a civil case and this angers the tax body.
As of 2018, seven million Kenyans were unemployed and over 1.4 million were desperately looking for jobs. Many of these unemployed and underemployed, who are easily stimulated by sports, have resorted to gambling as an income generating method, as it seems like a fast and easy way to make ends meet.
Meanwhile, the government who should ensure that it reduces the growing gambling disorder in the country as well as create more jobs for Kenyans, the majority of who live on less than $1.90 per day, is more concerned with taxes. The government believes the betting tax will still generate SH30 billion ($297 million) yearly to its coffers.
In 2017, Kenya’s President Uhuru Kenyatta signed a Finance Bill into law, allowing for a uniform 35 percent tax rate on all gambling revenue, up from 7.5 percent some firms were paying. By 2018, a law allowing betting and lottery firms to withhold a fifth of the sums won by betting enthusiast was passed and on March 29, senior resident magistrate Dennis ruled that the Kenya Revenue Authority (KRA) could demand winning tax from betting and lottery firms.
This decision was, however, overturned on April 11, 2019, when some betting enthusiasts in the country took the matter up. The overturn did not augur well with the tax authority which noted that the court suspended the operation of sections 2,10, 34 and 35, that provided for deduction of withholding tax from winning on betting.
Acting commissioner for KRA legal services, Paul Matuku noted that “The effect of the said order is that the KRA is unable to collect approximately Sh2.7 billion ($26.59 million) per month meant to finance sports, art, culture development and universal healthcare.”
A PricewaterhouseCoopers (PWC) 2017-2021 gambling outlook report shows that the yearly turnover of the sports betting industry in Kenya is worth $20 million and will reach $50 million in 2020 as demand grows. As of 2015, the industry paid $28.3 million in taxes, ranking third on the African continent after South Africa and Nigeria.
In the 2016/2017 financial year, the industry generated a gross gambling revenue of Ksh20 billion ($198 million), equivalent to about half of the annual health budget, figures from the Kenyan gambling regulator, Betting Control and Licensing Board (BCLB) showed.
The gambling industry in Kenya has several sub-sectors including gaming, lotteries, sports betting and prize competitions. Currently, there are more than 30 licensed betting firms and casinos in the country and many, especially the unemployed, borrow money to bet. This continuous habit places them in a cycle of perpetual debt and gambling addiction.
Betting has been prevalent in the East African country, however, the upsurge was a result of improved internet penetration and the demand for smartphones. The majority of sports betting is done on mobile phones; as much as three-quarters of 17 to 35 years olds in the country have admitted to having placed a bet.
With the inadequate regulatory frameworks and the statement from the tax authority, it shows that the government is more concerned about raking in millions of dollars in tax revenue.