Is Kenya poised to reverse course on its gambling tax strategy?

(AsiaGameHub) –   Gambling is poised to become a key focus within a series of comprehensive reforms targeting Kenya’s tax system.

A draft version of the country’s 2026 finance bill, submitted to the National Assembly, outlines intentions to reinstate a 20% withholding tax rate—reversing the decision made in October 2025 that had lowered it to 5%.

The proposal also revises the timing at which this tax is applied.

Previously, under changes introduced by the Finance Act 2025, the 5% tax was levied when a player withdrew funds from their betting account. If enacted, the 20% rate will be imposed on the net winnings—calculated as the amount won minus the stake placed by the player.

The earlier move to reduce the tax rate was proposed by the Parliamentary Budget Office with the aim of increasing government revenue from Ksh 5.4 billion (£32.9 million) to Ksh 11.4 billion (£69.54 million). However, the swift reversal suggested by the current proposal indicates that the previous policy may not have achieved its projected success.

In addition to changes affecting taxable winnings, the bill broadens the definition of taxable deposits to encompass “all funds intended for gambling purposes,” which are also subject to a 5% tax.

The legislation states: “‘Amount deposits’ refers to the total value of money or equivalent assets transferred or otherwise provided for betting or gambling activities. This includes contributions made by either the player or the operator, whether in cash, cash equivalents, or through accounts managed by players, operators, or licensed entities. It also covers conversions into instruments such as chips, tokens, tickets, credits, or similar forms.”

This revised definition expands the scope of taxable betting funds beyond the prior classification, which limited taxation to amounts deposited directly into a customer’s betting wallet.

Unintended consequences

Beyond direct increases in gambling-related taxes, the bill may also affect Kenya’s gambling sector through measures targeting mobile devices.

If passed by Parliament and signed into law by President William Ruto, a 25% excise duty will be applied upon activation of mobile phones and associated communication devices.

The rapid growth of gambling across Kenya and throughout Africa has largely been driven by rising access to mobile technology across the continent.

Such a tax increase could elevate the cost of imported smartphones, potentially slowing the adoption of mobile devices in Kenya and, consequently, limiting the ability of the online gambling industry to reach new users.

Regulatory changes take hold

Kenya’s gambling market continues to implement reforms outlined in the Gambling Control Act, 2025—a legislative update designed to modernize the sector and replace outdated laws dating back to the 1960s.

As part of these reforms, the Gambling Regulatory Authority (GRA) has been established to replace the Betting Control and Licensing Board (BCLB).

In March, the GRA announced the appointment of Peter Maina Karimi as its new Director General, tasked with guiding the transition process.

The updated Gambling Control Act provides technical guidelines governing betting operations, casinos, and lotteries, while also aiming to reduce social harms associated with gambling.

Upon his appointment, Karimi pledged to introduce stricter controls against illegal gambling activities and enhance responsible gambling safeguards.