The High Court in Nairobi declined a request by gaming and betting operators in the County 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 for 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.
The judge also said the petitioners delayed filing the application within the three months grace period before the enactment of the law.
Although the Nairobi City County Betting, Lotteries and Gaming Act, 2021, came into effect in May, the gaming and betting operators filed their petition in July.
“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.
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In the petition, the investors wanted the court to restrain the county and its agents from implementing or seeking to enforce in any manner the provisions of the Act.
The law requires public lotteries to pay up to Ksh.7 million, betting premises up to Ksh.1 million, while casinos pay up to Ksh.2.2 million for various licences.
The law requires public lotteries to pay up to Ksh.7 million, betting premises up to Ksh.1 million, while casinos up to Ksh.2.2 million for various licences.
Betting, lotteries, and gaming draw permits are charged Ksh.5,000 per draw, and an entertainment tax of 10 percent is charged on winning revenue for the same.
The petitioners wanted the court to bar the collection of the new levies until their case challenging the legality of the law is heard and determined.
The formula used to calculate 20% tax on bets
Since the government introduced taxation on proceeds from betting, it has caused rage among bettors, many finding it unreasonable to place any bet over a major slash on what they get after placing a bet.
In 2019, AGOK outlined the formula that is being used on 20 percent withholding tax on proceeds of betting in compliance with the government directive.
“We concur with the government on tax collection to meet its agenda but the methodology and interpretation of the term winnings gives the operators a bad image especially with their customers who do not understand that the contentious interpretation is from the government. We feel this will have a negative impact on tax collection,” said Agok CEO Aloyce Omondi
The companies use betting odds, which are normally in decimal format, to calculate winnings.
“A Ksh.10 bet at odds of 3.0 would return Ksh.30 (Ksh.20 of winnings + Ksh.10 stake) if successful. If unsuccessful you lose your Ksh.h10 stake. The calculation is now winnings = (odds x stake) stake”
The association stressed on how much it complies with the government order, yet said the methodology and interpretation of the term winnings gave the operators a bad image especially with their customers who do not understand that the interpretation is from the government.
“A Ksh10 bet at odds of 2/1 would return Ksh30 (Ksh20 of winning plus Ksh10 stake) id successful. If unsuccessful, you would lose your Ksh10 stake” the statement outlined.
Additional report by Business Daily
