Kenya’s budget office warns new tax on gambling withdrawals may fuel black market
The new tax applies to every withdrawal from betting, gaming, lotteries and similar activities, regardless of whether a profit was made or if funds were simply deposited and pulled out untouched.
Kenya.- Kenya’s Parliamentary Budget Office has warned that the new 5 per cent withholding tax on all gambling withdrawals could drive players to unregulated black market options, undermining efforts to increase government revenue.
In its review of the approved budget for the 2025/26 financial year, the office highlighted potential risks in the policy change introduced via the Finance Act 2025, which shifts from a previous 20 per cent tax on net winnings only.
The new tax applies to every withdrawal from betting, gaming, lotteries and similar activities, regardless of whether a profit was made or if funds were simply deposited and pulled out untouched.
The Budget Office explained in its report: “If a player has deposited funds but decides to withdraw them without placing any bets, they could still face a 5% tax on that withdrawal, despite not earning any income.
“The new tax proposal has the risk of driving players away from formal betting platforms, as many casual and small-scale bettors might be discouraged by the prospect of losing part of their initial deposits even without making a profit.”
The reform also includes changes to the excise duty on bets, now levied at 5 per cent and collected at the point of transferring money from mobile wallets to gambling accounts, rather than when bets are placed.
While the watchdog acknowledges the potential for revenue generation, it recommends monitoring player accounts, migration trends and actual revenue collections to spot any downturn early.
The government maintains that the new tax policy is designed to widen the tax base and meet Treasury demands. However, the office’s concerns suggest everyday users could be adversely affected, potentially slowing activity in Kenya’s key betting market, which is a hub for international firms.
These changes unfold as the country gears up for a regulatory shift in its gambling industry, with the Gambling Regulatory Authority set to replace the Betting Control and Licensing Board (BCLB) in 2026. In the meantime, the government has suspended all annual gambling licence applications ahead of the transition.
