The High Court of Kakamega, Kenya, has ruled to uphold the 12.5% excise tax levied on the gambling industry, confirming its legality. This decision is seen as an important measure for Kenya to strengthen gambling regulation and protect public finances.
The case originated on August 21, 2023, when Edward Okwama filed a lawsuit in court, with defendants including the National Assembly, the Kenya Revenue Authority (KRA), Milestone Gaming Limited, Standard Global East Africa, and the Attorney General. He argued that the excise tax, along with a 20% withholding tax on winnings, was imposed simultaneously, violating the principle of equality under Article 27 of the Constitution and constituting illegal double taxation.
However, the presiding judge, Stephen Mbungi, dismissed this claim. He noted that the excise tax targets the amount bet by gamblers, while the withholding tax applies to the winnings, differing in nature and applicable stages, thus no double taxation exists. He further explained that the total income tax on gambling is levied on gambling companies, distinct from the obligations of players.
The National Assembly defended that the relevant legislation fully complies with the legislative power granted by Article 95 of the Constitution. The court ultimately ruled that the excise tax system is legal and effective, capable of preventing the social harms brought by gambling and ensuring stable revenue for the tax department.
This judgment injects new authority into Kenya's gambling regulatory framework, further solidifying the compliance obligations of operators, while helping to curb gambling addiction and related financial risks. Although Okwama has not yet stated whether he will appeal, the legal community generally believes that the outcome of this case will serve as an important reference for future similar challenges and will strengthen the government's governance of the rapidly growing gambling industry.
