Gambling looks set to be one of the industries targeted as part of a raft of reforms to Kenya’s tax framework.
A draft proposal of the country’s 2026 finance bill submitted to the National Assembly has set out plans to return to a 20% withholding tax rate – reversing a decision made in October 2025 to reduce this rate to 5%.
The proposal also changes the point at which the tax is taken.
Under the changes made in October as part of the Finance Act 2025, the 5% tax is applied when a player withdraws from their betting account. If implemented, the 20% rate will be levied on the winning minus the player’s stake.
The move towards a lower tax rate was made by the Parliamentary Budget Office in a bid to increase tax revenue from Ksh 5.4bn (£32.9m) to Ksh 11.4bn (£69.54 m). However, plans for such a quick reversal in sentiment suggest that the move wasn’t as successful as projected.
Alongside a shift in tax rates on winnings, the bill also expands the definition of taxable deposits to include ‘all funds for gambling purposes’, which are also subject to a 5% tax rate.
The bill reads: “‘Amount deposits’ means the total value of money or money’s worth paid, transferred or otherwise made available for betting or gambling purposes. Whether provided by a player or the operator, whether in cash or cash equivalents, whether or not such amount is held in an account operated by a player, operator or licensed person, or converted into chips, tokens, tickets, credits, or similar instruments.”
This change in definition increases the scope of taxable betting funds from the previous definition of ‘amount deposited into a customer’s betting wallet’.
Unintended consequences
Alongside direct increases to tax, Kenya’s gambling industry could also be impacted by the bill’s targeting of mobile devices.
If approved by Kenya’s Parliament and signed into law by President William Ruto, a 25% excise duty on mobile phones and related communication devices will be charged when a device is activated.
The surge in popularity of gambling across Kenya and the wider African region has been largely attributed to the increased penetration of mobile devices across the continent.
Such a change could raise the cost of imported phones, potentially slowing down the spread of devices across Kenya and, therefore, the potential for the online gambling sector to reach new players.
Regulatory changes take hold
Kenya’s gambling market is continuing to implement the changes set out by the Gambling Control Act, 2025, which was introduced in a bid to modernise Kenya’s gambling sector and update laws that dated back to the 1960’s.
As part of the changes, the Gambling Regulatory Authority (GRA) was established to replace the Betting Control and Licensing Board (BCLB).
In March, the GRA confirmed the appointment of Peter Maina Karimi as its new Director General to help lead the transition.
The new Gambling Control Act provides technical guidelines for betting, casinos and lotteries, while also seeking to minimise social harms for players.
At the time of his appointment, Karimi promised to introduce stricter measures to combat illegal gambling and strengthen responsible gambling controls.
