In the full year leading up to June 2023, Kenyans enthusiastically participated in online betting, wagering a staggering amount of Sh88.5 billion. This fervent activity persisted despite a severe crackdown on the gambling sector and the introduction of punitive taxes during this period.
The Kenyan Revenue Authority (KRA) reaped substantial benefits from this betting frenzy, collecting a substantial Sh6.64 billion in excise taxes alone. This sum was contributed by gaming firms as part of the newly imposed 7.5 percent tax on wagered amounts.
To break down the numbers further, Kenyans were placing an average of Sh242 million worth of bets daily, which translates to Sh10.1 million every hour, Sh168,333 each minute, or Sh2,806 every second. These statistics underscore the transformation of gambling from a pastime into a full-fledged economic activity.
If we were to liken Kenya’s gambling industry to a marketplace, its financial magnitude would rival that of the Nairobi Securities Exchange (NSE), where equity turnover reached Sh94.2 billion the previous year.
The revenue generated by punters could single-handedly finance various sectors, including manufacturing and industrialization, social protection, governance and justice, sports, culture, recreation, and the tourism industry, with some surplus funds remaining.
This remarkable rise in betting persisted despite persistent crackdowns on existing gaming firms and the imposition of heavy taxation year after year.
A survey conducted in 2021 revealed a substantial increase in the participation of adults in gambling, rising from 1.9 percent in 2019 to 13.9 percent in 2021. Men residing in urban areas between the ages of 18 and 36 exhibited a higher inclination to bet.
Interestingly, most gamblers possessed an education level beyond secondary school, and individuals aged 18 to 25 were the most active in betting compared to other age groups.
Approximately one in every ten Kenyans, or 11.2 percent of adults, engaged in betting, viewing it as a dependable source of income, although this marked a decline from the 22.7 percent figure recorded in 2019.
Data from the Betting Control and Licensing Board (BCLB) indicated that bookmakers generated revenues of Sh16.3 billion in the year ending June 2022, while casinos accrued Sh6.4 billion. These figures are conservative estimates, representing gross gaming revenues after accounting for winnings.
Kenya already imposes some of the highest tax rates on betting, which seem to increase every year. Gaming firms are required to withhold 20 percent of the winnings paid out to bettors. Additionally, a 15 percent tax is levied on the firms’ gross gaming revenues. These taxes are imposed in addition to annual license fees and compliance fees, which vary depending on the nature and size of the gambling operation. Gaming firms are still obligated to pay income tax at the standard rate of 16 percent.
Recently, the KRA integrated its system with those of gaming firms, mandating businesses to remit excise duty overnight. Despite the escalating taxes on gambling, similar to taxes on tobacco and alcohol, there has been no conclusive evidence that they have deterred either punters or bookmakers.