NAIROBI, Kenya – Kenya’s betting industry is bracing for fresh turbulence after the government introduced a new tax measure that will see players taxed on every withdrawal from their betting accounts — including their own deposits.
The Finance Act 2025 imposes a 5 percent withholding tax on all withdrawals from betting and gaming wallets, replacing the previous 20 percent tax on net winnings.
This marks a major policy shift that will see the Kenya Revenue Authority (KRA) collect tax even when players make no profit.
Under the new system, if a player deposits Sh1,000 and later withdraws it without placing a single bet, they would still lose Sh50 to the taxman.
The Parliamentary Budget Office (PBO), in its latest Budget Watch 2025 report, warned that the move could discourage small-scale bettors and drive users away from licensed betting platforms, undermining the very revenue goals the government hopes to achieve.
“If a player has deposited funds but decides to withdraw them without placing any bets, they could still face a five percent tax on that withdrawal, despite not earning any income,” the report notes.
“This lack of clarity and perceived unfairness could hurt industry growth and push players to unregulated platforms.”
Treasury defends move as ‘simplification’
The National Treasury maintains that the new levy is aimed at simplifying enforcement and expanding the tax base, saying it will enhance compliance through digital monitoring systems and plug loopholes that have plagued revenue collection in the past.
According to government projections, tax collections from the betting sector are expected to rise sharply — from Sh5.4 billion to Sh11.4 billion — under the new regime.
However, the PBO cautioned that this short-term revenue boost could come at the cost of long-term sustainability if the sector contracts due to reduced player activity.
“The number of active betting accounts will also serve as an indicator of whether players are abandoning formal platforms,” the report says. “Any legal challenges filed in court against taxing withdrawals will be critical in determining the sustainability of this approach.”
Industry fears a chilling effect
Analysts say the “blanket taxation” could deal a blow to Kenya’s booming online gaming ecosystem, which has grown into a significant driver of digital payments and mobile money transactions.
Industry players are concerned that the measure treats deposits and winnings alike, effectively penalizing participation rather than profit.
Some have warned that the tax may encourage a shift to informal or offshore betting platforms that fall outside KRA’s regulatory net.
As debate intensifies, stakeholders are urging the Treasury to reconsider or clarify the policy before implementation to avoid crippling one of Kenya’s most dynamic — yet controversial — digital sectors.