Tax collections from betting are expected to more than double in the current financial year to June 2026, despite policy shifts through the Finance Act 2025 that slashed the excise duty on wagered amounts and withholding on winnings to five percent.
Parliament Budget Office (PBO) —which advises lawmakers on economic and budget affairs—projects collections of betting taxes to climb to Sh11.4 billion a year, from Sh5.4 billion as the State nets a windfall from changes in the applicable levies on gambling.
The projection reveals that the State has set itself for a higher share of gambling billions despite June tax cuts that were seen as an incentive encouraging betting among Kenyans.
Under the Finance Act 2025, a five percent charge is applied when a punter moves cash from their mobile-money account to a betting wallet, while a similar charge is applied when a punter moves money from their betting wallet to their mobile-money account, irrespective of whether they made bets or not.
“This new change is expected to increase revenue collection from Sh5.4 billion to Sh11.4 billion,” PBO said in their Budget Watch 2025 report.
“Under the new tax measures, a ‘withdrawal’ refers to any amount of money a customer takes out of their betting or gaming wallet, regardless of whether it represents a profit or a return of their original stake.”
The new taxes apply to residents and non-residents, charged on the total withdrawn amount rather than just net winnings. The Excise Duty Act previously set a 15 percent charge on punters’ wagers where the tax was applied when a gambler ‘made a bet’.
Currently, a punter moving Sh100 from the mobile-money wallet would attract a charge of Sh5 irrespective of whether they make a wager or not.
The Finance Act 2025 also clarified the amount wagered or staked as the amount of money transferred by a customer into a wallet maintained by a licensed betting and gaming operator for betting and gaming purposes.
The income tax previously imposed a 20 percent withholding tax on winnings earned from betting.
The definition of winnings, however, excluded the original amount staked by a player, ensuring that only actual gains were taxed.
Currently, a customer withdrawing Sh100 from their betting wallet to their mobile-money account would attract a charge of Sh5 as the new withholding tax, irrespective of whether they made a punt or not.
Changes made through the Finance Act 2025 mean that the tax base was shifted from betting and gaming proceeds from winnings to the amounts withdrawn.
The betting tax shake-up implies that a punter would lose Sh9.75 for every 100 shillings if they make a deposit and a subsequent withdrawal without making a wager. This would include Sh5 (10 percent of the Sh100) representing the excise charge at the point of deposit and a further Sh4.75 (10 percent of Sh95 deposited in the gaming wallet) charge at withdrawal.
Analysts saw the changes in the betting taxes regime as a boon to punters, even as they warned of a moral hazard from the move, perceived as an incentive to gamblers.
“Reduction of excise duty rates on gaming and betting is a plus for punters in the betting and gaming sector and may be viewed as an incentive for players in this sector,” analysts at KPMG said previously.
“However, the reduction in the rate may also bring into context issues around responsible gambling and betting.”
The Parliament Budget Office expects the betting tax shakeup to significantly raise government revenue.
The independent office domiciled at the National Assembly, however, warns that the change could still be a disincentive to gambling by driving punters to illegal betting sites.
“The new tax on withdrawals has the potential to significantly raise government revenue, but it also risks discouraging participation by taxing both winnings and the original stake,” PBO added.
“This could push many players to unregulated platforms, reducing the effectiveness of the measure. It will be important to keep an eye on revenue collection trends to see if the projected increase from Sh5.4 billion to Sh11.4 billion is achieved.”
The PBO says that the active number of betting accounts can also serve as an indicator of whether players are abandoning formal platforms.
Kenya Revenue Authority (KRA) disclosed Sh5.7 billion in betting taxes receipts for the fiscal year to June 30, 2025, a 22 percent growth from the prior period.
KRA has integrated its system with those of local betting companies with the aim of having a real-time view of the industry to seal revenue leakages.
