Kenyans wager a record $608.24 million online in FY23 despite crackdown, taxes

Kenyans placed a staggering Ksh88.5 billion ($608.24 million at current exchange rates) in online bets throughout the year ending June 2023, displaying resilience in the face of stringent sector crackdowns and new taxes.

The Kenya Revenue Authority (KRA) reaped substantial gains, amassing Ksh6.64 billion ($45.63 million) in excise taxes from gaming firms, mainly due to the newly implemented 7.5% tax on waged amounts, Business Daily Africa reported.

The data highlights a daily average of Ksh242 million ($1.66 million) placed on bets, translating to Ksh10.1 million per hour, Ksh168,333 per minute, or Ksh2,806 per second. This rapid pace underscores how gambling has evolved from a leisure activity to a significant economic endeavor.

Remarkably, if the Kenyan gambling industry were likened to a stock market, it could rival the Nairobi Securities Exchange (NSE), which recorded an equity turnover of Ksh94.2 billion last year, the report said.

In a peculiar historical context, Kenya prohibited gambling until 1952. Surprisingly, the Christian Council of Kenya advocated for its decriminalization, asserting that regulation would curb what they saw as a vice that contradicted the protestant work ethic. The advent of the Internet and mobile phones in the 1990s then further paved the way for gambling's resurgence, including the entry of foreign online betting companies.

The surge in betting activities has persisted despite rigorous clampdowns on existing gaming firms and escalating taxation. In 2019, a government crackdown on gaming firms, driven by allegations of criminal activities like money laundering and tax evasion, nearly crippled the sector. However, the industry rebounded, with thousands of enthusiastic participants drawn by the prospect of quick wealth.

According to the Kenya FinAccess Household Survey of 2021, the share of adults engaged in gambling surged from 1.9% in 2019 to 13.9 percent in 2021. Notably, urban males aged 18 to 36 exhibited the highest likelihood of betting. Although the proportion of gamblers with education beyond secondary school increased, youth aged 18 to 25 remained the most active betting demographic.

While 11.2 percent of adults, or one in 10 Kenyans, deemed betting a reliable income source, this figure declined from 22.7 percent in 2019. The Betting Control and Licensing Board (BCLB) reported bookmakers generating Ksh16.3 billion and casinos earning Ksh6.4 billion in revenues for the year ending June 2022. These figures represent gross gaming revenues, factoring in winnings.

Kenya enforces high tax rates in betting, with levies increasing annually. Gaming firms are obliged to withhold 20 percent of punters' winnings, alongside a 15% tax on firms' gross gaming revenues. Additionally, businesses must fulfill annual license and compliance fees, which vary based on operation type and size. Standard income tax rates at 16% still apply to gaming firms, and the KRA recently mandated overnight excise duty remittances by linking its system with those of gaming companies.