Excessive Taxation Spurs Job Losses in Betting Industry

15 May 2024

The Ripple Effect of Excessive Taxation on the Betting Industry

In a move that underscores the challenges faced by the betting industry in Kenya, Betsafe, a prominent betting firm, has announced its departure from the Kenyan market. The exit comes in the wake of what is described as excessive taxation, which has become a significant hurdle for companies operating within the sector. Victor Sudi, the CEO of Betsafe, confirmed that the company ceased its Kenyan operations as of May 14, leading to unfortunate job losses for its employees.

The betting industry in Kenya is subjected to multiple layers of taxation. Firms are required to pay a 15 percent tax on gross gaming revenue, a corporate tax of 30 percent on profits, and an income tax rate of 16 percent. These taxes are compounded by annual licensing and compliance fees. A proposed gaming levy in Parliament last year suggested an additional 13 percent tax on gross revenues, further exacerbating the financial burden on betting firms.

Mr. Sudi, in a phone interview, assured that customers with pending balances would receive refunds within seven days. However, he did not specify the exact number of employees affected by the closure. The Kenyan government has been vocal about its stance against the betting industry since 2019, citing concerns over its growing appeal among the youth and unemployed. Increased taxation measures have been part of a broader strategy to regulate the industry.

Historically, other betting giants like Betin and Sportesa have also withdrawn from the Kenyan market due to tax-related disputes with authorities. SportPesa, however, managed to make a comeback under a new entity, Milestone Games Limited.

The Kenya Revenue Authority (KRA) imposes a 12.5 percent tax on betting stakes and a 20 percent withholding tax on winnings. Further tightening the noose, the Finance Bill of 2024 proposes an increase in the tax on betting stakes to 20 percent. This proposal is part of ongoing efforts by the government to exert greater control over gambling activities in the country.

As the landscape for betting firms becomes increasingly challenging due to excessive taxation, the future of this industry in Kenya remains uncertain, with potential implications for economic activity and employment.

excessive taxation

How has excessive taxation impacted Betsafe in Kenya?

Excessive taxation in Kenya has squeezed Betsafes margins, leading to a reevaluation of their operations and investment strategy, while also impacting the overall betting industrys growth potential.

Can excessive taxation drive companies out of markets?

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