The Kenyan government introduced a new fiscal bill in July 2025, reforming the online gambling tax system by changing the original 20% tax rate on net profits to a uniform 5% tax on all withdrawals and deposits from betting wallets. Legal experts point out that the newly adopted "wallet flow" tax system simplifies the enforcement process, expands the tax base, and is expected to double the government's gambling tax revenue from 5.4 billion Kenyan shillings to 11.4 billion shillings. However, the new policy also increases the cost burden on recreational gamblers, as taxes are required regardless of winning or losing, which may change user betting behavior, and regulatory agencies need to pay attention to subsequent behavior and ethical challenges.
Tax Policy Changes and Expected Benefits
The Kenyan "2025 Fiscal Bill" stipulates that all withdrawals and deposits from betting wallets are subject to a 5% tax, replacing the previous practice of levying a 20% tax on net profits and a 15% consumption tax on deposits. Legal advisors point out that the new system automatically deducts taxes digitally at the wallet gateway, simplifying enforcement, preventing tampering, and covering a wider range of users (including those who withdraw immediately after depositing without betting). The Parliamentary Budget Office (PBO) expects this move to increase gambling tax revenue from 5.4 billion Kenyan shillings to 11.4 billion shillings, providing the government with a continuous cash flow and stabilizing fiscal revenue.
Impact on Gamblers' Costs and Behavior
Under the new policy, gamblers must pay a 5% tax on deposits and withdrawals regardless of winning or losing, significantly increasing the cost burden for recreational gamblers. Data from Kenya's largest operator, SportPesa, shows that the average wallet balance of users increased by 285 shillings in the first month after the new regulations were implemented, indicating that users may prefer to retain funds rather than engage in frequent transactions. Legal experts believe that the lower actual tax burden (e.g., the tax on winning 10,000 shillings reduced from 1,500-2,000 shillings to 500 shillings) may stimulate betting frequency and liquidity, but long-term behavioral changes need to be further verified by official data.
Policy Positioning and Potential as an African Model
The Kenyan government's reform aims to build a real-time tax network based on wallet flow, increasing revenue while plugging loopholes. Legal experts are cautiously optimistic that if the new policy is properly implemented and supplemented with a responsible gambling framework, Kenya could become a model for digital tax policy in Africa, balancing fiscal innovation with behavioral insights. This tax reform coincides with the gambling licensing procedure reform in July 2025 (including a significant increase in licensing fees), reflecting the government's dual goals of strengthening regulation and increasing revenue.
