In a significant shift impacting the gambling landscape in Kenya, betting firms are reportedly paying out less to punters, making it challenging for many Kenyans who rely on gambling as a source of income.
Data analysis from the Betting Control and Licensing Board (BCLB) reveals a sharp decline in payout ratios, dropping from 89.8 percent (Sh269.3 billion) in 2019 to 72.8 percent (Sh43.7 billion) in the last year.
The decrease in payout ratios is attributed to aggressive taxation measures and stringent compliance enforced by the authorities to curb the growing gambling trend in the country.
The BCLB notes that the strict compliance requirements implemented in 2019 aimed to limit the gambling habit have played a significant role in the recent trends.
As a result of these changes, the total betting stakes have also witnessed a decline, reaching Sh60 billion last year compared to a peak of Sh299.7 billion in 2019.
The BCLB links this drop in sales for betting firms and payouts to gamblers to the impact of increased taxation and compliance measures.
The government’s response to the gambling craze includes the introduction of an excise tax on betting stakes at 7.5 percent from July 1, 2021, along with a 20 percent withholding tax on every winning bet.
Subsequently, the excise tax on betting stakes was raised to 12.5 percent from July of the following year, as part of ongoing efforts to discourage excessive gambling.
Despite the deliberate increase in taxation, the number of betting firms entering the Kenyan market continues to grow, with 22 new firms currently licensed out of a total of 110, according to the latest BCLB list.
In an additional attempt to regulate the industry, the government has proposed the Gambling Control Bill of 2023, which introduces new taxes on betting firms and mandatory savings from every stake.
The bill suggests a 15 percent gambling tax on a betting firm’s gross gaming revenue and an extra one percent monthly levy on the same revenue.
The funds generated from these taxes will be allocated to establish rehabilitation centers and raise awareness about the adverse effects of gambling.
The proposed bill also includes a provision for a portion of the stake amount to be set aside for savings, further aligning with the government’s aim to make betting less appealing.
The specific amount will be determined by the gambling regulator in consultation with the Interior Cabinet Secretary.
With 65 percent of Kenyans engaging in gambling to win money, and the country boasting the highest number of youthful gamblers at 76 percent, the government’s measures reflect a broader effort to address the social and economic impact of the gambling industry in Kenya.
