Taxation on winning bets drops by Sh1.4 billion

Betting Control and Licensing Board Chief Executive Officer (CEO) Peter Mbugi. PHOTO | JEFF ANGOTE | NMG

Withholding tax on winning bets, which was paid to the Kenya Revenue Authority in the year ended June, dropped by Sh1.42 billion reflecting a slump in an industry amid clamping down on the addictive sector.

The taxman said it collected Sh5.67 billion in withholding tax from winning bets in the period under review reflecting a drop of 19 percent from Sh7.09 billion a year earlier.

The fall reflects a slowdown in the industry on increased taxation on gamblers as the government moves to tame the betting craze mostly among the youth and jobless Kenyans.

Gamblers pay 20 percent of every winning bet in addition to a 7.5 percent tax on each betting stake that was re-introduced in July last year.

Betting Control and Licensing Board (BCLB) chief executive Peter Mbugi says the heavy taxation has served the government’s intention of clamping down on the betting craze.

“Licensed operators are increasing but most of them are doing zero-sum business. The market is no longer expanding. The average amount spent by gamblers also reduced last year compared to three years when the industry was at its peak,” said Mr Mbugi.

A drop in the tax can be attributed to a reduction in winning bets or a decline in the number of bets placed by gamblers.

The taxman takes WHT which is calculated at the rate of 20 percent on the winning bet after subtracting the amount staked.

The government also re-introduced a 7.5 percent tax on every betting stake meaning that for every Sh100 staked, KRA takes Sh7.5.

Betting firms pay tax at a rate of 15 percent on the gross gaming revenue— turnover minus winnings paid out. They also pay corporate tax on profits at a rate of 30 percent.

The government also formed a multi-agency team that draws memberships from the betting regulator, KRA, and the Financial Reporting Centre among other State agencies.

Data from the KRA shows that tax on gross gaming revenue rose 13 percent to Sh3.294 billion in the year ended June from Sh2.907 billion a year earlier.

Gaming is popular among the youth with some funding their betting addiction through digital loans. The jobless have also turned to the craze in the hope of striking it rich.

Betting peaked in recent years as jobless Kenyans and the youth used billions of shillings to place bets in the hope of making quick money to pay their daily bills.

Safaricom revealed that punters pushed Sh169 billion through M-Pesa to bet in the year ended March, translating to Sh469 million per day highlighting the extent of the habit that prompted strict regulation and increased taxation from the government.

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Note: The results are not exact but very close to the actual.