That cycle played out in painful detail between 2019 and 2020, when a 20 per cent excise duty on stakes prompted Sportpesa and Betin — the country’s two dominant operators — to suspend operations entirely. The government lost the very revenue it was trying to capture. It took the repeal of that tax, signed into law by President Kenyatta in July 2020, to begin coaxing the market back to health.
Five years on, Kenya’s Finance Bill 2026 risks reopening that wound.
What’s Being Proposed
The Bill proposes reintroducing a 20 per cent withholding tax (WHT) on winnings from prize competitions and short-term lotteries — effectively reversing core elements of the 2025 gambling-tax reforms that shifted the tax base towards deposits and withdrawals. It also seeks to broaden the definition of taxable deposits to include cash equivalents such as chips, tokens and promotional credits.
The Gambling Regulatory Authority (GRA) made its opposition clear before the National Assembly’s Departmental Committee on Finance and National Planning at stakeholder hearings on 26 May. Its position is measured, detailed and, frankly, correct.
The GRA’s Case
GRA Director General Peter M. Karimi put the central problem bluntly: prize competitions are marketing promotions, not wagers. Players do not stake money to enter them. Attempting to levy a withholding tax on non-cash prizes — household appliances, electronics, spa treatments, shopping vouchers, car servicing — creates a collection mechanism that simply does not exist in practice.
Who pays the tax on a kettle? At what point is it withheld? How is a KRA assessment issued for a car service?
“Prize competitions are primarily marketing promotions where players do not even wager a stake.” — Peter M. Karimi, GRA Director General
The GRA’s word for this proposal was “practicably not enforceable”, and it is difficult to argue otherwise. The authority went further, recommending that the definition of “winnings” be removed from gambling regulatory frameworks altogether, citing classification and implementation difficulties that go beyond prize promotions alone.
On the proposed expansion of the tax base to include chips, tokens and promotional credits, the GRA’s concern is equally sound. Free bets and bonus funds issued by operators do not represent real money deposited by a punter. Taxing them as though they do distorts the tax base and penalises operators for routine commercial activity — activity that, in many cases, drives the customer engagement that generates genuine taxable revenue downstream.
The GRA’s preferred approach is straightforward: define taxable deposits as cash payments made into a punter’s wallet from any source. Clean, clear, auditable.
The Numbers Speak
The GRA did not arrive at this position empty-handed.
Figures shared with the committee and corroborated by the Kenya Revenue Authority show that tax collections rose 11 per cent to Ksh28.45 billion (approximately US$220 million) from Kenyan online casinos and betting sites in Kenya by April 2026, compared with Ksh25.24 billion (US$195 million) in the 2024/25 financial year.
That growth was delivered not by a winnings tax, but by the deposit and withdrawal levies introduced in 2025 — the very framework now at risk of being complicated by the Finance Bill 2026 proposals.
This is precisely the kind of evidence that should inform tax policy. When a structure is working — producing consistent and growing revenue without driving operators offshore or pushing bettors towards unlicensed platforms — the case for disrupting it demands a very high bar of justification. That bar has not been cleared here.
The Broader Lesson
Kenya’s history with gambling taxation is a case study in how quickly good intentions can produce bad outcomes. The 2019 excise duty was introduced, presumably, to raise revenue. It did the opposite: operators left, bettors migrated to foreign and unregulated platforms, and collections declined.
“The reason behind [removing the tax] was that the high level of taxation had led to punters placing bets on foreign platforms that were not subject to tax and thereby denying the government revenue.” — National Assembly Finance and National Planning Committee, 2020
The 2025 reforms corrected course. The deposit-and-withdrawal model created a broader, more stable base. Revenues are up. The sector is functioning. The regulatory relationship between the GRA and the industry appears, by the standards of recent history, to be in reasonable working order.
Reopening that settlement — particularly with measures the regulator itself describes as unenforceable — would be a significant step backwards.
Where This Goes Next
The Finance Bill is currently under parliamentary scrutiny following the close of public participation on 25 May. Lawmakers will now consider possible amendments before the Bill proceeds further.
The GRA has done its part: it has presented a clear-eyed, evidence-based case for why the winnings tax should be dropped and why the deposit-based model should be preserved. Whether MPs take that advice is another matter.
But the regulator’s message deserves to be heard. Kenya spent years learning that taxing gambling badly costs more than it raises. The current framework is proof that a better approach exists. Now is not the time to forget those lessons.
