Kenya’s government has proposed a new 20 per cent withholding tax on gambling winnings under the Finance Bill 2026, marking a major shift in the country’s betting tax framework. The proposal comes less than a year after Kenya introduced a 5 per cent levy on gambling deposits and withdrawals as part of wider reforms aimed at increasing tax revenue from the sector.
The Finance Bill 2026 was tabled in Parliament on 30 April and entered public participation on 11 May, with submissions closing on 25 May. If approved, the changes will apply to both residents and non-residents earning gambling winnings in Kenya.
New tax rules target winnings and withdrawals
A direct 20 per cent withholding tax on earnings from licensed betting, gaming, lottery, and prize competition operators is one of the proposed changes to the Third Schedule of the Income Tax Act.
The proposed law defines winnings as payouts received from gambling activities, excluding the original stake placed by the player. It also defines withdrawals as any money or cash equivalent taken out of gambling accounts.
The bill also seeks to broaden the definition of deposits to include chips, tokens, credits and other similar instruments used in gambling platforms.
Gambling regulator raises implementation concerns
Kenya’s Gambling Regulatory Authority (GRA) has asked Parliament to reconsider parts of the proposed amendments, particularly the taxation of prize competitions and non cash rewards.
The authority presented its concerns before the National Assembly’s Departmental Committee on Finance and National Planning on 26 May.
GRA Director General Peter M. Karimi said the proposed 20 per cent withholding tax on prize competitions and short term lotteries would be difficult to implement because many promotions do not involve direct wagering.
According to Karimi, prize competitions are mainly used as marketing tools where participants often receive rewards without placing bets. He added that applying tax collection to noncash items such as electronics, household goods, shopping vouchers and vehicle servicing packages would create operational challenges.
The regulator also opposed plans to expand taxable deposits to include cash equivalents such as chips, tokens and credits. The authority stated that many of these instruments come from free bets and promotional campaigns, making valuation inconsistent and complicating tax calculations.
Instead, the GRA recommended limiting the taxable deposit definition to actual cash deposits made into betting wallets.
Kenya remains one of Africa’s largest betting markets
Kenya continues to rank among Africa’s largest gambling markets, supported by widespread mobile payment use and strong sports betting activity. Platforms linked to mobile money services such as Safaricom and its M Pesa system have contributed to the rapid growth of digital betting.
The government has continued to tighten regulation around gambling and digital financial transactions as part of wider revenue collection efforts.
According to figures shared by the GRA with the Kenya Revenue Authority, gambling tax revenue rose 11 per cent to Ksh28.45 billion ($219.6 million) by April 2026, compared with Ksh25.24 billion ($194.8 million) in the previous financial year. The increase followed the introduction of taxes on deposits and withdrawals in 2025.
Sector reforms and expanded oversight plans
After the Gambling Control Act of 2025 went into effect, the GRA is likewise going through institutional adjustments. The former Betting Control and Licensing Board is being replaced by the authority, which is becoming a state business.
According to Karimi, the regulator intends to increase employment and install new surveillance technologies to improve oversight of online gaming. Prior to a more extensive rollout in June 2026, the authority plans to hire up to 200 workers and enhance its licensing and compliance processes.
The regulator is also preparing plans for a national lottery system and examining frameworks that would allow it to directly manage portions of gambling related taxes and levies to support regulatory operations and sector development programmes.
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