Kenya’s new gambling tax policy to hit casual bettors hardest

Kenya’s latest iteration in iGaming taxation – the Finance Act 2025 – has drawn reactions from legal bodies who view it as a welcome development for the government, if properly regulated.

The policy, rolled out by the government in July, allows for a 5% tax rate on every withdrawal made on any betting wallet, scrapping the previous 20% levy on net winnings. An additional 5% excise duty on deposits also came into effect, which does away with the previous duty of 15%.  

Legal advisors David Sarinke of McKay Advocates and Allan Mzungu of MMS Advocates both believe the new policy could bring about a financial boom for the government.  

Yet, it has also shifted a higher cost burden onto casual bettors and has introduced new behavioral and ethical challenges that gambling regulators must monitor closely.  

“Business Daily [recently] reported government betting tax revenues are projected to nearly double after the rate cuts.” Sarinke tells iGB. “That strongly implies increased betting activity has already started to pick up following the Finance Act 2025 changes.”  

“This change simplifies enforcement because tax is now collected digitally at the wallet gateway rather than at the level of individual bets,” Mzungu explains further.  

“It broadens the tax base, since even people who deposit and later withdraw without [actively] betting are taxed, capturing far more users than before. It will surely ensure continuous cash flow to the Kenyan revenue authorities, as deposits and withdrawals occur daily.” 

‘Wallet-flow’ taxation system  

According to the Parliamentary Budget Office (PBO), this “wallet-flow” system could see a doubling of gambling tax revenue. With collection now automatic and seemingly “tamper-proof”, which could mean a projected rise from about KSh5.4 billion to KSh11.4 billion in the 2025-26 financial year. 

“Under the old regime, it was the winners who paid the most – 15% to 20% of their winnings,” explains Mzungu. “Now, all bettors will pay 5% on deposits and withdrawals, regardless of whether they win or lose.” 

Mzungu says Kenya’s new gambling tax policy will stabilise revenue and close loopholes for the government. However, casual bettors will end up paying more as they are taxed even without winning.  

As Sarinke puts it: “This shift has created a cash-flow based tax model rather than a bet-outcome model.” 

The impact on betting behaviour 

SportPesa, Kenya’s largest operator, reported in an August 2025 update that the average wallet balance per active user rose by KSh285 within the first month of the new regulation. This indicated that bettors were now retaining funds for longer periods. 

“In terms of the behavioural impact on bettors, I’d say it is still too early to determine as the regulator has not yet released any official data,” Sarinke notes.  

“But you [expect] the lower effective tax burden [on winnings] would naturally incentivise higher betting frequency and wallet liquidity.” 

Mzungu goes on to clarify the metrics behind Kenya’s new gambling tax system: “Before the reform, a bettor who won KSh10,000 would lose between KSh1,500 and KSh2,000 to the withholding tax on winnings. Now, under the new law, withdrawing that same KSh10,000 attracts only KSh500 in tax, which is a 70% reduction in effective tax liability.” 

The Finance Act 2025 has turned Kenya’s betting ecosystem into a real-time, wallet-based tax network. It simplifies enforcement for government, boosted revenues and incentivizes continuous betting for experienced punters. 

Mzungu is quietly optimistic in the long-term: “If properly enforced and supported by responsible-gambling frameworks, the reform could stand as a model for digital tax policy in Africa, balancing fiscal innovation with behavioral insight.”

In July the gambling regulator in Kenya announced a shakeup of its licensing process, including a significant licensing fee hike.