Court Upholds Betting Taxes as Kenya Moves to Tighten Gambling Regulation

The Kakamega High Court has thrown out a constitutional petition that sought to overturn several key tax provisions governing Kenya’s betting industry, affirming the legality of excise duty on wagers and withholding tax on winnings.

At the centre of the challenge was Paragraph 4A of Part II of the First Schedule to the Excise Duty Act, 2015, as amended by the Finance Act, 2023, which introduced a 12.5 per cent excise duty on amounts staked by individuals participating in betting. The court’s decision now cements the validity of that provision.

The petition was filed on August 21, 2023, by advocate Edward Okwama, who sued the National Assembly alongside Milestone Gaming Limited, Standard Global East Africa, the Kenya Revenue Authority, and the Attorney General. In his suit, Okwama had asked the court to declare the tax regime unconstitutional, claiming that the combination of the 12.5 per cent excise duty on wagers and the 20 per cent withholding tax on winnings amounted to double taxation. He also argued that the measures were discriminatory and infringed upon constitutional rights to property, equality, and socio-economic welfare.

Delivering the ruling, Judge Stephen Mbungi dismissed those arguments outright. “I find that the petition has no merit. All declarations sought are declined,” the judge said, siding with the state’s position.

The National Assembly, in its response, defended the legislative process under Article 95 of the Constitution, maintaining that the clauses in question were properly enacted through the Finance Act 2023. The Petitioner, however, had contended that imposing excise duty on every stake while also charging withholding tax on winnings, and not applying similar measures to other comparable sectors, was discriminatory and unconstitutional.

Judge Mbungi rejected those claims, clarifying the legal distinctions between the different tax mechanisms. “The difference is clearly discernible in this, just like in the earlier one. Gross Gaming Revenue under Section 29(a) of the Betting Lotteries and Gaming Act (Cap 131) is a distinct tax just like Excise Duty. It is levied on the betting companies while the excise duty is levied on punters,” he ruled.

“Therefore, it cannot amount to double taxation. Similarly, it is not the same tax.”

The ruling comes as Kenya prepares to usher in sweeping reforms under the Gambling Control Bill, which has cleared its final hurdle in the Senate and now awaits presidential assent. The legislation introduces a capital requirement of KSh 100 million for online betting operators and establishes a new monitoring framework for the sector.

Under the new law, all betting activity will be tracked in real time through an integrated electronic monitoring system, enabling regulators to oversee wagers, payouts, and customer balances across licensed platforms. Authorities expect the system to strengthen compliance and close loopholes in tax collection.

The Bill also provides for a 15 per cent tax on gross gambling revenue, while operators will face a monthly levy of up to 1 per cent earmarked for funding addiction treatment programmes, research, and public awareness initiatives. Advertising restrictions are set to tighten, with a ban on gambling ads between 6:00 am and 10:00 pm, curbs on celebrity endorsements, and a stipulation that 10 per cent of all adverts must promote responsible gambling.

By fLEXI tEAM