Kenya’s betting tax reform and why it matters

Kenya’s Parliament has radically overhauled the betting industry’s tax system by enshrining the changes in the Finance Act 2025. Instead of the previous model of withholding on winnings, two mirror-image levies are being introduced: 5% when topping up a betting account from a mobile wallet and 5% when withdrawing funds. The authorities are counting on a noticeable increase in revenues, but analysts warn of the risk of a shift of small-deposit players to the unregulated market.

Budget forecast

Kenya’s Parliamentary Budget Office estimates that the reform will increase collections from 5.4 billion Kenyan shillings (about £32.9 million) to 11.4 billion (about £69.5 million). In effect, this amounts to more than a doubling of tax revenues from a single sector.

Comparison of rates before and after

Previously, players paid a 20% withholding tax on winnings (excluding the original stake), and a 15% excise duty was charged at the moment a bet was placed. Later, in June, the point at which the excise is collected was revised. A different structure now applies: 5% excise duty is automatically deducted when funds are transferred from a mobile wallet to a bookmaker’s account, and another 5% tax is withheld when money is withdrawn from a betting account.

How the new tax framework works

The central idea of the reform is shifting the main points of control. The first 5% is automatically deducted at the moment a player transfers money from a mobile wallet (e.g., M-Pesa) to a betting company’s account. The second 5% is withheld at the stage of withdrawing funds back. This fundamentally changes tax administration: the tax is tied not to the outcome of a bet, but to the flow of funds, which simplifies oversight and improves tax collection.

The adjustment is directly linked to the problem of operators running online from outside the country. The previous model, under which the excise duty was charged at the moment a bet was placed, did not allow transactions by such companies to be tracked effectively.

Why the excise was shifted to top-ups

The logic of the changes was publicly explained by the chair of Parliament’s Finance Committee, Kimani Kuria.

“We are changing the system so that the excise duty is paid at the moment money is transferred from a mobile wallet to a betting company’s account. There are many organisations operating virtually, including from outside the country, from which we cannot collect the excise duty. Now, every time a Kenyan transfers funds from a mobile wallet to a betting company’s account, the excise duty is paid at that moment.”

In essence, shifting the collection point is intended to anchor fiscal enforcement in the mobile payments infrastructure, which in Kenya is almost universal.

Beyond higher revenues, there are concerns

Against the backdrop of optimistic budget forecasts, analytical reports contain warnings about unintended consequences of the new framework.

Small-deposit players find themselves in a vulnerable position. If a person tops up an account and then withdraws funds without placing a single bet, they will lose 10% of the amount (5% on entry and 5% on exit). As noted in Budget Watch 2025, “uncertainty and perceived unfairness may not only push players away from regulated platforms, but also harm the sector’s growth and undermine the very revenue goals the government hopes to achieve.”

A parallel overhaul of the regulator

Alongside the tax reform, Kenya is launching a large-scale transition to a new system of gambling oversight under the Gambling Control Act, 2025. The transition is expected to be completed by February 2026, when the powers of the current Betting Control and Licensing Board (BCLB) will be transferred to a new body — the Gambling Regulatory Authority of Kenya (GRA).

The BCLB has already suspended the acceptance of annual licence applications and renewals. All current licensees continue to operate under the previous terms until their permits expire.

What the new regulator is preparing

The GRA is developing implementing regulations for the new law, covering licensing, compliance (regulatory compliance), and operational standards. The emphasis is on tightening requirements, strengthening consumer protection, and consolidating oversight under a single authority. Among the key conditions for obtaining a licence and operating in the online segment are:

• At least 30% of the applicant’s shares must be held by Kenyan citizens.
• A bank account with a licensed Kenyan financial institution is mandatory for receiving all gambling revenues.
• For online operators: identity verification at player registration, real-time integration with the GRA’s monitoring system, compliance with data protection law, anti-money laundering (AML) requirements, and cybersecurity standards.
• A ban on operations by foreign operators without local registration and compliance with Kenyan regulatory requirements.

Why Kenya’s experience is relevant beyond Africa

Industry experts note that if the budget forecasts are confirmed, Kenya’s experience could become a clear example for countries considering a revision of the tax burden on gambling. The main conclusion of the preliminary analysis is that growth in fiscal revenues is sometimes achieved not by raising rates, but by reshaping how the tax is collected.

This example is being watched by many Asian countries, including India. The country has taken note of Kenya’s experience amid rising interest in sports betting, especially on cricket, which is considered the country’s national sport. Various factors point to growing interest, including an increase in downloads of online cricket betting apps, which the authors of a review site we found among the top search results told us about. Experts say that the number of cricket fans in the country is already in the tens of millions, and soon it will be in the hundreds of millions. And a significant share of them are beginning to actively use betting apps.

Regulation of online betting in India still lags behind the pace of the sector’s growth, so the reforms in Kenya could not fail to interest lawmakers.

What will determine the reform’s overall effect

The real outcomes for the budget and for the market ultimately depend on two factors: how players behave (whether they stay on legal platforms or move into the grey market) and how effectively the new tax administration mechanisms cope with the task of controlling transactions. The first meaningful data will appear no earlier than when the GRA is fully operational.