Kenyan online betting handle hits new record

Betting has proved to be relatively inelastic in Kenya.
Betting has proved to be relatively inelastic in Kenya.

Kenyans bet Sh88.5bn despite a crackdown on the online betting sector.

Kenya.- It’s been reported that Kenyans placed Sh88.5 billion (€557,142) in online bets in the 12 months to June 30. That’s despite higher taxes and a crackdown on the sector.

According to Business Daily Africa, the Kenya Revenue Authority (KRA) collected Sh6.64 billion in excise taxes from a new 7.5 per cent tax on wagers. Media has commented that the new tax, which is added to a 20 per cent withholding tax on winnings, 15 per cent tax on operators’ gross gaming revenues and the standard rate of income tax of 16 per cent, does not appear to have deterred demand.

Michael Mburugu, a regional tax partner at consultancy PKF Eastern Africa, said: “Betting is inelastic while being as addictive as alcohol, cigarettes or luxury goods. The industry has been a quick fix for the exchequer’s revenue problem where new taxes will always be directed to the sector especially when the economy is struggling. However, one would think that if a tax goes beyond a certain limit, it may be untenable for some participants in the industry.”

The Kenya FinAccess Household Survey of 2021 reported an increase in gambling participation from 1.9 per cent in 2019 to 13.9 per cent in 2021, with males aged 18 to 36 in urban areas most likely to bet. The majority of gamblers had a level of education beyond secondary school.

The Betting Control and Licensing Board (BCLB) reported that bookmakers made revenues of Sh16.3bn in the year ended June 2022. Kenya now proposes to establish a National Lottery, which is expected to generate Sh34.52 billion in taxes, including corporation taxes in the first three years. Most of the funds will be channelled to the Sports Fund.

Last month, Kenya’s interior cabinet secretary Fred Matiang’i highlighted gambling as a potential money laundering risk, increasing the government’s focus on the industry. It comes after 11 companies were cleared to receive gambling licences. The authorities say many operators still do not meet requirements.

Matiang’i’s new report warns that betting firm owners could be using their companies to launder billions of shillings. It’s expected that the Central Bank of Kenya (CBK) may require more disclosures on the cash used to pay jackpots, which have reached as high as Sh250 million (€2m) amid a boom in betting that has resisted government attempts to clampdown through higher taxes and tougher licence conditions.

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