High Court Upholds Kenya’s Betting Taxes, Dismisses Constitutional Petition

The High Court in Kakamega has dismissed a constitutional petition that sought to overturn several central tax provisions governing Kenya’s betting industry. The petition had challenged the legality of Paragraph 4A of Part II of the First Schedule to the Excise Duty Act, 2015, which was amended through the Finance Act, 2023, to impose a 12.5 per cent excise duty on amounts staked by participants in betting activities.

In its decision, the court upheld the constitutionality of the regime, including both the excise duty on wagers and the withholding tax imposed on winnings. The case had been filed on August 21, 2023, by advocate Edward Okwama, who listed the National Assembly, Milestone Gaming Limited, Standard Global East Africa, the Kenya Revenue Authority, and the Attorney General as respondents.

“I find that the petition has no merit. All declarations sought are declined,” Judge Stephen Mbungi said in his ruling, dismissing claims that the taxes violated constitutional protections.

Okwama’s arguments revolved around the 12.5 per cent excise duty on amounts wagered, which he maintained amounted to double taxation when combined with the 20 per cent withholding tax on winnings. He further argued that the levies were discriminatory and infringed on constitutional rights, including the right to property, equality, and socio-economic well-being.

The National Assembly defended the process behind the Finance Act, 2023, invoking Article 95 of the Constitution as the basis for enacting the law. In his submissions, the petitioner contended that requiring punters to pay both excise duty on wagers and withholding tax on winnings, while not applying equivalent obligations to others in similar circumstances, amounted to discrimination.

In his judgment, however, Justice Mbungi made a clear distinction between the taxes at issue. “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,” the Judge ruled. He added, “Therefore, it cannot amount to double taxation. Similarly, it is not the same tax.”

The ruling comes as Kenya moves to strengthen regulation of the gaming industry under the new Gambling Control Bill, which introduces sweeping reforms. Among them is a requirement for online betting operators to maintain a minimum capital of KSh 100 million, following Senate approval of the legislation that now awaits presidential assent.

The bill mandates real-time surveillance of all gambling transactions through an integrated electronic monitoring system that will enable regulators to track wagers, payouts, and player balances across licensed platforms. The measure is aimed at tightening oversight and closing loopholes in tax collection.

Additionally, a 15 per cent tax on gross gambling revenue will be instituted, complemented by a monthly levy of up to 1 per cent earmarked for addiction treatment programs, public education, and research initiatives. Advertising regulations will also be toughened, banning promotions between 6:00 am and 10:00 pm, curbing celebrity endorsements, and obligating that 10 per cent of all advertising content promote responsible gambling practices.

By fLEXI tEAM