Gambling operators in Kenya have been spared punitive tax hikes after members of parliament opted to remain the status quo.
On Tuesday, Kenya’s National Assembly voted to scrap plans to impose a uniform 50% tax on all gambling revenue that the government had claimed was necessary to reduce gambling-related harms among its citizens. Betting operators will continue to pay 7.5%, lotteries will pay 5%, gaming operators will pay 12% and prize competitions will pay 15%, exactly as they did before this whole mess kicked off two months ago.
In late March, Kenyan Treasury Secretary Henry Rotich shocked the gaming industry with his 2017-18 budget, which contained the dramatic tax hikes. A flurry of protests ensued, including a legal challenge of the tax plan’s constitutionality by local betting operator Sportpesa.
Last Thursday, MPs voted to maintain the sports betting tax at 7.5% while imposing the new 50% rate on other forms of gambling. But objections were raised almost immediately after the vote by legislators who claimed that a quorum wasn’t present and thus the vote wasn’t official. National Assembly Majority Leader Aden Duale invoked parliamentary procedure to require a fresh vote on the subject.
Tuesday’s debate featured arguments that the increased tax rate would have a punitive effect on non-betting gambling operators, deterring further investment and curbing future growth. Majority Leader Duale proposed a compromise amendment that would set the uniform tax rate at 35% but this was rejected by the other MPs.
The Finance Bill still requires the assent of President Uhuru Kenyatta, but assuming he plays ball, Kenya’s betting and gaming operators can go to bed tonight safe in the knowledge that the past two months were apparently nothing but a very bad dream.
The news will come as particular relief to online betting operator DafaBet, which launched its Kenya-facing site just days before Rotich first dropped his tax hike plan. Also breathing easier is local operator Cheza Gaming, which launched its online, mobile and text-based sports betting portal just a couple weeks ago.