Companies running gambling operations in Kenya could struggle if a new law, that became effective in the New Year is not amended. The law, which increased taxes and aims to combat problem gambling in Kenya is now under review and a new amendment bill will, if passed, return gambling taxes to their previous rates.
A new controversial Kenyan gambling law introduced at the start of this year could be scrapped. Growing pressure from businesses providing gambling in Kenya could force the government to backtrack on its new Kenyan gambling tax, reducing gambling tax it to its previous rate.
Kenyan National Assembly Majority leader Aden Duale submitted a tax laws amendment Bill last week which would lower the countries current 35% tax rate on gambling to a lower more moderate level. The Bill would also add several amendments to Kenyan gambling law including a tax on gambling winnings.
The amendment bill came after Kenya’s president Uhru Kenyatta approved the law which became effective on January 1st 2018. The law increased taxes for bookmakers who paid 7.5%, casinos, which paid 12% and lotteries, which paid 15% to a flat rate of 35%. Businesses running gambling operations also pay a 30% corporate tax and are required to donate 25% of their profit to charity.
Betting companies strike back against the Kenyan gambling law
Betting companies were quick to take action against the law, publicly criticizing it and even ceasing funding in sports. Many companies are threading to stop services in Kenya. The National lottery recently went bankrupt and the business owners were quick to blame the tax law. “Operating any lottery under this framework is not possible and therefore business operations are forced to close” a spokesperson from Bradley LTD, the company that ran the lottery, was quoted saying.
The law could be an advantage for larger gambling firms
The law is most likely to affect smaller gambling businesses, which would be forced to operate at higher costs with an increased risk of folding. Larger businesses, which operate internationally, would be less affected as they derive most of their profits outside of Kenya.
Sports in Kenya could suffer
SportsPesa is one company that has already terminated sports sponsorship and teams from Kenya’s domestic football and rugby union, the boxing association of Kenya and the national rugby teams are expected to suffer. The Kenyan government has promised to create a sports funding program to mitigate this loss, with money coming from the taxes collected from gambling operations.
Taxing to stop young people gambling
With the rise of smartphones and even SMS betting services the accessibility and popularity of online sportsbook sites in Kenya is increasing, epically among the youth. With 76% of young Kenyans admitting to having tried online gambling at least once, the Kenyan government believes that the risk of problem gambling among the youth is on the rise.
The Kenyan government have argued that problem gambling is the main reason for the tax hike, which they rate as dangerous to youths as drinking alcohol or smoking. Kenya has the highest population of young gamblers in east Africa and the tax is meant to combat this. It is yet to be know if the tax is effective at controlling problem gambling but with such strong opposition, it may not get the chance.