Ethiopia imposes higher taxes on gaming to fuel state revenue
The Ministry of Revenue says the changes form part of a broader plan to strengthen domestic revenue collection.
Ethiopia.- Ethiopia has raised taxes on gambling winnings and reinforced turnover-based levies on operators under Proclamation No. 1395/2025, a move aimed at boosting state revenue from one of Africa’s fastest-growing gaming markets.
The reform increases the tax on winnings from games of chance, including lotteries, prize draws and sports betting from around 15 per cent to between 20 per cent and 25 per cent of the full prize amount. Licensed operators will continue paying a turnover tax of about 15 per cent on total sales or stakes, alongside existing compliance and reporting requirements.
The Ministry of Revenue says the changes form part of a broader plan to strengthen domestic revenue collection. The National Lottery Administration has also defended taxation and licensing as tools to safeguard the public from gambling-related harm.
Analysts, however, note that the higher rates would lead to a reduction in net payouts and promotional offers, which could discourage casual players, particularly those in low and middle-income groups, from participating in online gaming activities. High-frequency bettors with more disposable income may continue playing, though possibly with smaller stakes.
The combined weight of turnover taxes, withholding requirements and compliance costs is expected to hit smaller and mid-sized businesses hardest. Industry experts also caution that the tax hike could drive customers towards unlicensed or offshore platforms for better returns, potentially undermining revenue targets.
In comparison to other African markets with high gambling levies, Kenya taxes betting winnings at 20 per cent and imposes a 15 per cent rate on operator revenue, while South Africa applies a 6–15 per cent winnings tax depending on the province, plus a gross gaming revenue levy.
The policy comes at a time of rapid growth in Africa’s gaming sector, which is projected to expand from $2.16bn in 2024 to $10.81bn by 2033, at nearly 20 per cent annual growth. Ethiopia, home to about 134 million people, half under the age of 20, with rising mobile and internet penetration, is expected to be among the key drivers of its growth.
The Ministry of Revenue will release detailed guidelines on withholding procedures in the coming months.
