High Court quashes petition to stop 7.5% deduction on betting stakes

Betting companies in Kenya have suffered another loss after the High Court quashed their petition to stop 7.5 percent excise duty on monies set aside for betting.

In a ruling by Judge George Odunga, the taxing is proper and lawful and that it does not relate to the 20 percent withholding tax on winnings and a 15 percent tax on the gross gaming revenue.

“I have found that in betting transactions, it is proper to levy excise duty on the stake,” said Justice Odunga.

“Whereas the two taxes may well impose burdens on the taxpayer, that does not make them unconstitutional,” he added.

The tax compels betting firms to withhold and forward Sh75 out of every Sh1,000 wagered regardless of whether the punter wins or loses.

The betting firms, including Betika, Betway, Odibets, Sportpesa, MozzartBet and Association of Gaming Operators, were enjoined in the suit against the Kenya Revenue Authority (KRA) and Parliament.

The Kenyan government is gradually implementing measures to tame gambling habits among Kenyan youth.

In August last year, for example, the High Court also declined a request by gaming and betting operators in counties to temporarily stop the implementation of a new law that allows the county government to charge higher fees for various licences.

According to the Association of Gaming Operators of Kenya, the new tax is not conducive to betting business, given the disrupted business environment amid the coronavirus pandemic.

But Justice Anthony Mrima said the operators failed to lay the basis for the grant of the temporary order.

“Whereas petitions on infringement of Bill of Rights are not time-bound, a party, however, must account for the time between the alleged infringement or threat of infringement of the human rights and fundamental freedoms and the filing of the claim,” said the judge.

betting firms to withhold and forward Sh75 out of every Sh1,000 wagered regardless of whether the punter wins or loses.

Treasury Cabinet Secretary Ukur Yatani proposed a 15 percent excise duty on gaming, and gambling advertisements.

This will apply to all television stations and other advertising outlets like billboards.

“Following various consultations and in line with the government’s commitment on mitigating against the social vices associated with betting activities, the National Treasury and Planning will be proposing to the National Assembly, the reintroduction of the excise duty on betting within the next six months,” Yatani said in a statement on July 2, 2020, following the removal of the levy.

This, according to Yatani is to discourage betting and consumption of alcohol that has taken shape among the Kenyan youth.

“Gambling, gaming, and alcohol addiction have become prevalent in our society. These habits are extremely addictive and can result in a variety of harmful repercussions, especially for the youth. Advertisements for alcoholic beverages, betting, and gaming contributes greatly to the promotion of these habits. To discourage the promotion of these products and activities,” he said.

Yatani said the adjustment is part of amendments under the Excise Duty Act that are set to generate an additional Ksh.50.4 billion to the exchequer for the FY 2022/23 budget.

2017 survey by GeoPoll indicates that Kenya has the highest number of betting youth.

The survey was carried out among youth between the ages of 17-35 in Uganda, Tanzania, Ghana, Nigeria, South Africa and Kenya.

Lawrence Baraza

Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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