I. INTRODUCTION: TAX AS THE CENTRAL BATTLEFIELD
In no other sector of Kenya’s economy has taxation been as central, as contested, and as consequential as in betting and gaming. The KRA’s tax demands, not regulatory action alone, were the proximate cause of the sector’s two largest operators exiting the market in 2019. Parliamentary debates over the excise duty rate have consumed multiple Finance Bill cycles. Court cases over the correct interpretation of ‘winnings’ have reached the High Court and generated precedents that reshaped how the entire industry accounts for tax.
Yet despite this turbulence, the picture has become clearer in recent years. The KRA’s integration of real-time monitoring systems across over 100 betting firms has transformed tax enforcement. Collections have grown from KSh 5.7 billion in FY 2021/22 to KSh 28.45 billion by April 2026. And the Gambling Control Act, 2025 has finally provided a coherent statutory framework within which tax law and gambling regulation can operate together.
The Finance Bill 2026, which proposes to reverse key elements of the 2025 reforms, shows that the debate is far from over. As the GRA itself has told Parliament, stability and predictability in tax policy is now as important to the sector’s health as any licensing reform.
SCALE: Kenya’s gambling sector generated KSh 28.45 billion in tax revenue by April 2026 — up 11% year-on-year — making it one of the most rapidly growing revenue streams in KRA’s portfolio.
II. WITHHOLDING TAX ON WINNINGS
A. The Legal Framework
Withholding tax (WHT) on betting winnings has historically been the most contentious element of Kenya’s gambling tax regime. Under the Income Tax Act (Cap. 472), betting companies are required to withhold a percentage of their customers’ winnings and remit the amount to the KRA.
As the KRA’s own guidance explains, the withholding obligation arises under Sections 10(g), 34(1)(m), 34(2)(i), 35(1)(i), 35(3)(h) and Paragraphs 3(i) and 5(i) of the Third Schedule, Head B of the Income Tax Act, Cap. 472. In practical terms: if a punter wins KSh 50,000, the betting company withholds the applicable percentage and remits it to KRA, while the punter receives the balance. The tax is treated as a final tax, the punter is not required to include it in a personal income tax return.
B. The Rate History
The withholding tax on winnings has been as volatile as the excise duty on stakes. For much of the sector’s recent history, it stood at 20% of net winnings, a significant burden that generated major litigation (see Section V below). The Finance Act 2025, effective 1 July 2025, made the most radical change: rather than taxing winnings at the point of payout, it restructured the tax to apply to withdrawals from a betting wallet at a rate of just 5%.
The practical impact was dramatic. Before the reform, a bettor who won KSh 10,000 would lose between KSh 1,500 and KSh 2,000 to the withholding tax on net winnings. Under the Finance Act 2025, withdrawing that same amount from a betting wallet attracts only KSh 500 in tax, a reduction of approximately 70% in effective tax liability for the average bettor.
FINANCE ACT 2025: Withholding tax changed from 20% on net winnings to 5% on withdrawals from betting/gaming wallets — effective 1 July 2025. The tax is deducted automatically by the platform and the bettor receives a confirmation message showing the withheld amount.
C. The Finance Bill 2026 Reversal
Just months after the 2025 reform took effect, the National Treasury published the Finance Bill 2026, tabled in Parliament on 30 April 2026 — proposing to reintroduce the 20% withholding tax on winnings. Legal analysts at Cliffe Dekker Hofmeyr confirmed that the bill proposes introducing a 20% withholding tax rate on winnings for both residents and non-residents, adding that this ‘shows a reversion to the earlier tax position’ prior to the Finance Act 2025 reforms.
Critically, the Bill does not propose removing the existing 5% withholding tax on withdrawals, meaning the two taxes would be layered, significantly increasing the overall burden on bettors if the bill is enacted in its current form.
The Finance Bill 2026 also introduces a new statutory definition of ‘winnings’: payouts made by operators licensed under the Gambling Control Act, 2025, from lotteries or prize competitions, expressly excluding the original amount staked or wagered. This definition is significant because the absence of a clear statutory definition was at the heart of the SportPesa/Betin litigation (see Section V).
Public participation on the Finance Bill 2026 closed on 25 May 2026. The Bill is expected to be enacted by 30 June 2026, with most provisions taking effect from 1 July 2026.
III. EXCISE DUTY OBLIGATIONS FOR OPERATORS
A. What Excise Duty Is and Why It Matters
Excise duty is a consumption tax levied by the government on specific goods and services. In the betting context, it is charged on the betting transaction itself, as distinct from income-based taxes like withholding tax on winnings or the GGR tax on operator revenue. It is borne primarily by the bettor, though operators are legally responsible for collecting and remitting it.
For operators, excise duty represents a major compliance obligation: the computation of excise on every qualifying transaction, the integration of collection mechanisms into their platforms, and the real-time remittance to KRA (see Section IV). Non-compliance carries severe consequences, including suspension of operating licences by the GRA.
B. Current Excise Duty Position — Finance Act 2025
The Finance Act 2025, effective 1 July 2025, restructured excise duty on betting fundamentally. Previously, the duty was charged at the point of wagering, on the amount staked. The new framework shifts the taxable event to the deposit stage:
- 5% excise duty on the amount deposited from a player’s mobile money wallet (M-Pesa, Airtel Money) to their betting account
- This replaces the previous 15% excise duty charged on the amount wagered or staked (itself a reduction from 20% in earlier years)
- The tax is collected when funds enter the betting ecosystem, before any bet is placed
The policy rationale for this structural change was enforcement: by taxing the deposit rather than the wager, the government can collect excise duty through Kenya’s tightly regulated mobile money infrastructure before funds reach platforms that may operate beyond direct regulatory reach, including foreign or virtual operators.
C. The Full Suite of Operator Tax Obligations
Under the current framework, a licensed betting operator in Kenya bears the following tax obligations simultaneously:
| TAX TYPE | CURRENT RATE | BASIS & LEGAL AUTHORITY |
| Excise Duty on Deposits | 5% | On deposits from mobile money wallet to betting account — Finance Act 2025; Excise Duty Act 2015 as amended |
| Withholding Tax on Withdrawals | 5% | On withdrawals from betting wallet — Finance Act 2025; Income Tax Act Cap. 472 as amended |
| Gross Gaming Revenue (GGR) Tax | 15% | On net gambling revenue of bookmaker — Section 29A, now under GCA 2025 framework |
| Corporation Tax | 30% | On taxable profits — Income Tax Act Cap. 472 |
| WHT on Winnings (Proposed) | 20% | Finance Bill 2026: proposed reinstatement on net winnings; not yet law |
| Advertising Excise Duty | 15% | On fees paid to TV, radio, print, billboard for gambling advertisements — Finance Act 2023 |
D. Proposed Expansion Under Finance Bill 2026
The Finance Bill 2026 proposes to broaden the definition of ‘amount deposited’ for excise duty purposes to include: any money or value paid, transferred, credited, or otherwise made available for betting or gambling, whether by a player or operator, and whether held in cash, cash equivalents, or converted into chips, tokens, credits, or similar instruments.
This broadened definition is aimed at closing loopholes used by platforms that accept cryptocurrency, virtual assets, or proprietary credit systems, and aligns with the Bill’s introduction of definitions for ‘virtual asset’ and ‘virtual asset service provider’ by reference to the Virtual Asset Service Providers Act, 2025.
LEGAL IMPLICATION: Operators who accept crypto, NFT-based wagering credits, or any non-cash equivalent of money for gambling purposes will, if the Finance Bill 2026 is enacted, be required to compute and remit excise duty on these transactions — a significant compliance expansion for platforms operating at the digital frontier.
IV. THE KRA’S ROLE IN MONITORING BETTING REVENUES
A. From Manual Compliance to Real-Time Integration
For much of the sector’s history, KRA’s collection of betting taxes depended on self-declared returns by operators, a model that was highly susceptible to under-declaration. The turning point came in October 2022, when KRA launched a phased integration of betting firms’ systems directly into the KRA’s own tax administration infrastructure.
The rollout began with 16 of the highest-revenue betting companies, requiring daily tax remittances via Safaricom’s M-Pesa using a dedicated Pay Tax API and data transmission service. By January 2023, the integration was in its second phase, data verification and compliance checks. By May 2023, the deadline for all approximately 137 online bookmakers to complete integration, KRA had on-boarded 36 firms, with the remainder required to integrate as a condition of registration and licensing.
By the 2023/24 financial year, KRA had real-time access to 111 companies in the gaming and betting sector, and the revenue impact was immediate and dramatic.
B. Revenue Collection — The Growth Story
The following table illustrates the transformative effect of real-time integration on KRA’s gambling tax collections:
| FIN. YEAR | TOTAL GAMBLING REVENUE | KEY DRIVER |
| 2021/22 | KSh 5.7bn | Baseline year — pre-integration, predominantly self-declared returns |
| 2022/23 | KSh ~17bn | Integration pilot begins October 2022 — first phase of 16 top firms |
| 2023/24 | KSh 24.2bn | Full system integration — 111 firms on-boarded; 26.2% growth |
| 2024/25 | KSh 13.2bn excise | Excise alone: 117.2% of target; real-time monitoring and system integration cited as primary driver |
| By April 2026 | KSh 28.45bn | Total gambling tax collections — 11% growth over full FY 2024/25; reported by GRA to Parliament |
C. How the Real-Time System Works
Under the current architecture, the tax collection process works as follows:
- When a bettor transfers funds from their M-Pesa or Airtel Money account to a betting wallet, the excise duty (currently 5%) is automatically deducted at source, before the funds reach the betting platform
- When a bettor withdraws funds from their betting wallet, the withholding tax (currently 5%) is automatically deducted, the platform withholds the amount and remits to KRA
- Betting firms are required to compute taxes after midnight each day and remit to KRA via a dedicated paybill number by 7am the following morning
- KRA has real-time visibility of these transactions through its integrated tax system, operators can no longer under-declare stakes, deposits, or payouts without immediate detection
- Failure by an operator to withhold and remit the correct amount attracts significant fines and, critically, can result in the suspension of their GRA operating licence
As one industry analysis noted: ‘This automated system has eliminated the possibility of punters having to manually submit tax returns on their betting activities since the tax is treated as a final tax at the point of withdrawal.’
D. The GRA’s Expanded Role
The Gambling Control Act, 2025 formalises an important institutional development: the GRA, not just the KRA, now has an independent mandate to monitor financial flows in the gambling sector. The GRA has stated its intention to expand financial oversight currently handled by the KRA, creating a dual-regulator monitoring structure. This means operators face both KRA’s tax enforcement apparatus and the GRA’s regulatory oversight simultaneously, a significantly more demanding compliance environment than existed under the old BCLB regime.
The GRA’s presentation to Parliament in May 2026, reporting the KSh 28.45 billion in gambling tax collections corroborated with KRA data, illustrates this joint oversight model in practice.
COMPLIANCE POINT: Under the Finance Act 2025, the point of taxation for excise duty has shifted from the moment a bet is placed to when funds are transferred from mobile money wallets to betting accounts — a change specifically designed to capture offshore and virtual operators that were previously able to avoid the tax by operating outside the local betting infrastructure.
V. TAX DISPUTES BETWEEN OPERATORS AND KRA
A. The SportPesa Withholding Tax Litigation — The Defining Battle
The most consequential tax dispute in Kenya’s gambling history is the protracted litigation between SportPesa (Pevans East Africa Limited) and the KRA, a case that ultimately shaped how withholding tax on betting winnings is legally defined in Kenya.
The dispute originated in 2019 when the KRA issued SportPesa with withholding tax demands and agency notices for WHT arrears for April and May 2019 amounting to KSh 3.29 billion and KSh 2.57 billion respectively. The KRA’s position was that the 20% withholding tax should apply to the gross payout to punters, that is, to both the original stake and the winnings above the stake.
SportPesa’s position was diametrically opposite: the tax should apply only to the positive difference between the total payout and the original stake, i.e., the net winning, not the gross payout.
B. The Tax Appeals Tribunal — Round One
SportPesa filed Tax Appeal Nos. 304 and 305 of 2019 before the Tax Appeals Tribunal on 28 June 2019. In the meantime — critically — the KRA wrote to the BCLB citing SportPesa’s alleged tax non-compliance and requesting non-renewal of its licence. SportPesa paid KSh 1.9 billion pending determination of the appeals, hoping for an amicable settlement.
On 6 November 2019, the Tribunal ruled in SportPesa’s favour on the key definitional question: winnings did not include the stake of punters. The Tribunal also placed greater responsibility for payment of the WHT on the punters themselves — not on the betting firms — partially shielding operators from aggressive pursuit of the 20% WHT.
TRIBUNAL RULING (2019): The 20% withholding tax on betting winnings should be charged on the positive difference between the payout and the stake — not on the gross payout. The obligation to pay WHT lies primarily with the punter, not the operator.
C. KRA’s Appeal — And the Sh8.59 Billion Demand on Safaricom
KRA appealed the Tribunal ruling, and simultaneously escalated its enforcement tactics dramatically. KRA declared Safaricom a withholding tax collecting agent for SportPesa and Betin, and demanded that Safaricom pay KSh 8.59 billion in withholding tax arrears: KSh 5.29 billion due from Betin (Gamcode Limited) and KSh 3.29 billion from SportPesa (Pevans East Africa).
This was a remarkable legal move: rather than pursuing the betting firms directly, KRA sought to collect the tax from the telecommunications company that processed their payments. The move reflected KRA’s recognition that — with the betting firms themselves exiting or contesting their licences, Safaricom was the most accessible collection point for the disputed tax.
D. The High Court Ruling — KSh 1.6 Billion Awarded
The disputes were consolidated and heard at the High Court. In a ruling with two distinct outcomes:
- Justice Alfred Mabeya ruled that betting winnings are income and should be taxed under the Income Tax Act, ruling in KRA’s favour on the fundamental question of taxability. The court allowed KRA to collect KSh 1.6 billion in betting tax from SportPesa.
- However, Justice David Majanja upheld the Tribunal’s finding that for the period 2018–2019, KRA could not collect the withholding tax that ought to have been deducted by the betting firms from punters directly, and that KRA’s only recourse was to pursue the punters themselves, not the operators.
SportPesa filed ITA No. E079 of 2021 and the Commissioner for Domestic Taxes filed ITA E048 of 2021 in the High Court. Both appeals were consolidated and heard concurrently, producing a split decision that left aspects of the tax liability unresolved.
E. The 2023 Excise Duty Challenge — SportPesa vs KRA Round Two
The litigation did not end there. In August 2023, High Court Justice Patrick Otieno issued a temporary conservatory order restraining the KRA from demanding 12.5% excise duty from betting punters, and directing betting firms Milestone Gaming Limited and Standard Global East Africa Limited not to deduct the excise duty, pending the hearing of an application filed by a betting enthusiast, Edward Okwama.
KRA contested this ruling. Subsequent court orders required the companies to make provisions for the excise duty for August 2023 while the substantive matter was being heard. KRA then escalated the dispute by requesting the BCLB to suspend the trading licences and paybill numbers of SportPesa and Finix, a direct use of regulatory power to enforce compliance with a disputed tax demand.
KEY PATTERN: KRA has repeatedly used the threat of licence suspension, by writing to the BCLB (and now the GRA) to flag tax non-compliance, as a lever to compel betting firms to pay disputed tax arrears even while litigation is ongoing. This blending of tax enforcement and regulatory licensing power has been one of the most contentious features of Kenya’s betting tax disputes.
F. The SportyBet Case — Under-Declaration and Asset Freezing
The pattern of KRA enforcement extended beyond SportPesa. In 2023, KRA moved to court against SportyBet over an alleged KSh 5 billion tax bill for the period 2018–2021. KRA alleged that SportyBet had significantly under-declared its income for those three years — discovered by cross-referencing the firm’s self-declarations against transaction data pulled from its bankers and Safaricom paybill accounts.
KRA sought to freeze SportyBet’s assets in court, arguing the huge amount might be transferred out of the country. SportyBet denied the allegations, and the matter was contested in court.
The SportyBet case illustrates a critical feature of the new enforcement landscape: KRA’s integration with Safaricom’s M-Pesa data gives it visibility into actual transaction volumes, meaning firms that under-declare against their paybill and bank records face a very high risk of detection.
G. The Core Legal Issue — What Is a ‘Winning’?
Running through all of these disputes is a single foundational question that Kenyan courts have grappled with for years: what is a ‘winning’ for the purposes of withholding tax? Does it mean the gross payout including the original stake? The net payout above the stake? The monthly net position across all bets?
The Finance Bill 2026’s proposed statutory definition, ‘payouts made by licensed operators from lotteries or prize competitions, excluding the original amount staked or wagered’, is a direct legislative response to years of judicial ambiguity. If enacted, it will provide clarity that has been absent from the legal framework and could resolve the definitional dispute at the heart of most of the major betting tax litigation.
VI. THE GRA’S OPPOSITION TO FINANCE BILL 2026
In an unprecedented development, the Gambling Regulatory Authority — Kenya’s own gambling regulator — formally testified before the National Assembly’s Departmental Committee on Finance and National Planning on 26 May 2026, opposing key provisions of the Finance Bill 2026.
GRA Director General Peter Maina Karimi presented the following arguments against the proposed 20% withholding tax on winnings:
- The 20% WHT on winnings from prize competitions is especially problematic where prizes are distributed in goods or services rather than cash — creating a situation where operators must withhold a cash tax from a non-cash prize, which is mechanically unworkable
- The proposed definition of ‘winnings’ is overly broad and would capture free bets, promotions, and bonuses originating from marketing activities — instruments that may not represent actual cash equivalents
- The GRA proposed limiting the definition of ‘amount deposited’ strictly to cash deposits made into a punter’s wallet ‘from any source’ — to maintain what it described as a ‘simple, stable and predictable’ tax regime
- The current framework had already delivered significant revenue growth: gambling tax collections rose 11% to KSh 28.45 billion by April 2026
- The back-and-forth in tax policy forces operators to repeatedly redesign compliance systems, imposing significant costs and creating legal uncertainty
GRA TO PARLIAMENT: The GRA argued that a simple, stable and predictable tax regime — not a higher rate — is the key to sustained and growing gambling tax revenue in Kenya.
VII. PRACTICAL GUIDANCE FOR OPERATORS AND BETTORS
For Licensed Operators
- Ensure full integration with KRA’s real-time tax remittance system, this is now a condition of GRA licensing, not a voluntary compliance measure
- Compute and remit excise duty (currently 5%) on every deposit from mobile money to betting wallet by 7am daily via the KRA M-Pesa Pay Tax paybill
- Deduct and remit withholding tax (currently 5%) on all withdrawals from betting wallets in real time
- Maintain records of gross gaming revenue and remit the 15% GGR tax in accordance with the Gambling Control Act, 2025
- If the Finance Bill 2026 is enacted, prepare compliance systems to handle both a 5% WHT on withdrawals and a 20% WHT on net winnings simultaneously, a significant system redesign
- Engage proactively with any KRA audit or agency notice, the courts have consistently held that KRA has broad powers to assess and collect gambling taxes, even if the precise quantum has been contested
- Advertising: ensure the 15% excise duty on gambling advertising spend is correctly computed and remitted
For Bettors
- Under the Finance Act 2025 (current law), the 5% withholding tax on your withdrawal is the final tax on your betting activity — you are not required to file a personal income tax return for betting income
- The tax is automatically deducted by the platform — you will receive a notification showing the amount withheld
- If the Finance Bill 2026 is enacted from 1 July 2026, an additional 20% WHT on net winnings (above your stake) will apply on top of the 5% withdrawal tax
- Deposits from your mobile money to your betting account are subject to 5% excise duty — this is deducted before your funds enter the betting platform
- Any operator who fails to deduct and remit the correct tax is in violation of the law — this is the operator’s legal obligation, not the bettor’s
VIII. CONCLUSION
Kenya’s gambling tax framework has undergone more changes in seven years than most sectors experience in a generation. From the legally ambiguous 20% withholding tax that triggered the SportPesa and Betin crisis of 2019, through the excise duty oscillations of 2020–2024, to the structural redesign of the Finance Act 2025 and the proposed reversal in the Finance Bill 2026, Kenya’s tax policymakers have struggled to balance three competing objectives: maximising revenue, maintaining a viable licensed market, and protecting consumers.
The KRA’s real-time integration achievement is the most significant enforcement innovation of the past decade. Growing gambling tax collections from KSh 5.7 billion to KSh 28.45 billion in the space of four years, without any change in the number of licensed firms, demonstrates that the primary driver of revenue growth is compliance enforcement, not rate escalation.
The Finance Bill 2026’s proposed return to a 20% withholding tax on winnings runs directly counter to this lesson. As the GRA told Parliament, it is the predictability and simplicity of the tax regime, not its nominal rate, that determines both compliance and market health. A 20% rate that drives operators offshore generates less revenue than a 5% rate that every licensed firm fully complies with in real time.
The coming parliamentary debate on the Finance Bill 2026 will be decisive. Kenya has an opportunity to consolidate the gains of the past four years, or to repeat the mistakes of 2019.
CC: Mary Ndzikwa
References & Legal Sources
1. Income Tax Act, Cap. 472 (Kenya) — Sections 10(g), 34, 35, Third Schedule
2. Excise Duty Act, 2015 (Kenya) — First Schedule as amended
3. Gambling Control Act, No. 14 of 2025 (Kenya)
4. Finance Act 2021 — excise duty on betting at 7.5%
5. Finance Act 2022 — excise duty maintained at 7.5%; horse racing exempted
6. Finance Act 2023 — excise duty increased to 12.5%; advertising excise at 15%
7. Finance Act 2025 — excise duty restructured to 5% on deposits; WHT reduced to 5% on withdrawals (effective 1 July 2025)
8. Finance Bill 2026 (tabled 30 April 2026; public participation closed 25 May 2026)
9. KRA — ‘Betting and Taxes in Kenya: Do I Have to Pay Any Taxes?’ — kra.go.ke
10. KRA Statement — FY 2024/25 Betting Excise Duty Collection: KSh 13.2 billion (August 5, 2025)
11. Capital FM — ‘KRA Nets Sh13.2bn from Betting Firms’ (August 5, 2025)
12. Capital FM — ‘Betting Firms Integration into KRA System Boosts Revenue by 26.2% to Sh24.2bn’ (July 27, 2024)
13. The Star Kenya — ‘KRA Nets Sh8.7bn Betting Revenue in Six Months’ (June 12, 2023)
14. TechWeez — ‘Kenyan Betting Firms Choose M-Pesa for Real-Time Tax Remittances’ (April 18, 2023)
15. Cliffe Dekker Hofmeyr — ‘Betting Tax, Withholding Tax: The Issue of Ambiguity in the Law’ (September 2022)
16. Cliffe Dekker Hofmeyr — ‘Analysis of the Kenya Finance Bill 2026’ (8 May 2026)
17. Business Daily Africa — ‘KRA to Appeal SportPesa, Betin Victory on Bet Prizes Tax Dispute’ (September 2020)
18. Business Daily Africa — ‘KRA Loses Court Tax Fight with Betting Firms’ (May 2022)
19. Business Daily Africa — ‘KRA Goes After Another Betting Firm Over Sh5bn Tax Bill’ (August 2023)
20. Standard Media — ‘Betting Tax: Court Bars KRA, SportPesa from Deducting 12.5%’ (August 2023)
21. TUKO.co.ke — ‘KRA Asks Betting Board to Suspend SportPesa’s Licence and Paybill Numbers’ (December 2023)
22. FocusGN — ‘Kenya’s GRA Formally Opposes Proposed Return of 20% Winnings Tax’ (May 2026)
23. Kenyan Wall Street — ‘Gambling Authority Opposes Finance Bill 2026’s Revival of 20% Tax on Winnings’ (May 2026)
24. Yogonet — ‘Kenya Betting Taxes Set to More Than Double Despite Rate Cuts’ (October 2025)
25. iGaming Business — ‘Kenya’s New Finance Act to Hit Casual Bettors’ (November 2025)
26. iGaming Expert — ‘Will Kenya Reverse Its Radical Tax Policy?’ (May 2026) 27. PwC Tax Summaries — ‘Kenya: Other Taxes’ (2025/2
