A Kakamega High Court has dismissed a constitutional petition that challenged several key tax provisions in Kenya’s betting industry.
The main matter in contention in the Petition was the legality of Paragraph 4A of Part II of the First Schedule to the Excise Duty Act, 2015, as amended by the Finance Act, 2023 that imposed a 12.5% excise duty on the amount staked by persons participating in betting activities.
The court’s decision affirms the legality of the taxes, which include an excise duty on wagers and a withholding tax on winnings.
The Petition dates back to August 21, 2023, when an advocate named Edward Okwama sued the National Assembly as a respondent alongside Milestone Gaming Limited, Standard Global East Africa, the Kenya Revenue Authority, and the Attorney General.
“I find that the petition has no merit. All declarations sought are declined,” Judge Stephen Mbungi stated in the ruling, rejecting arguments that the tax regime was unconstitutional.
Okwama’s petition had sought to declare various tax measures unconstitutional, including the 12.5% excise duty on the amount wagered, arguing that it constituted double taxation when combined with the 20% withholding tax on winnings. He also claimed the taxes were discriminatory and violated constitutional rights to property, equality, and socio-economic well-being.
In its objection to the Petition, the National Assembly had defended the legislative process, particularly Article 95 of the Constitution on the enactment of the Finance Act 2023, which actualises the clauses.
The Petitioner had claimed that the imposition of 12.5% Excise Duty on the amount wagered, played or staked plus an additional 20% Withholding Tax on winnings and not subjecting the same requirement to similarly situated persons in the country was discriminatory and unconstitutional.
In the ruling, however, the Judge found that there was a clear distinction when excise duty is levied on a punter (the person betting) upon staking and when withholding tax is levied on a punter upon winning.
“The difference is clearly discernible in this, just like in the earlier one. Gross Gaming Revenue under Section 29(a) of the Betting Lotteries and Gaming Act (Cap 131) is a distinct tax just like Excise Duty. It is levied on the betting companies while the excise duty is levied on punters,” ruled the Judge.
He added: “Therefore, it cannot amount to double taxation. Similarly, it is not the same tax.”
Regulating a Guilty Pleasure
Kenya is preparing to impose a KSh 100 million capital requirement on online betting operators after the Senate approved the final version of the Gambling Control Bill, marking the end of legislative negotiations and clearing the way for presidential assent.
The bill also mandates real-time surveillance of all betting activity through an integrated electronic monitoring system, allowing the regulator to track wagers, payouts, and player balances across licensed platforms. The system is expected to tighten enforcement and plug leakages in tax collection.
A 15% tax on gross gambling revenue will be introduced, alongside a monthly levy of up to 1% to fund addiction treatment, research, and public awareness campaigns. Advertising will face tighter restrictions, with a ban between 6:00 am and 10:00 pm, limits on celebrity endorsements, and a requirement that 10% of all ads promote responsible gambling.