MPs raise red flag over suspected manipulation of betting winnings by firms

BETTING/FILE

Members of Parliament have raised suspicion over a manipulation of winnings by betting firms operating in Kenya.

They say while the amount punters have been sinking into betting has increased in the past one year, in relation to Excise Duty paid, taxes from winnings are not reflecting the increased amounts Kenyans put into gambling.

MPs engaged the Kenya Revenue Authority in an intense debate over inconsistencies in betting tax revenues.

The betting firms are mandated to pay excise duty at 15 per cent on the amount of money put on a bet. They are also expected to pay a further corporation tax at 30 per cent, and a 20 percent withholding tax on winnings.

However, while excise duty collections rose significantly— by 24 per cent to Sh9.9 billion—revenue from withholding tax on winnings declined by Sh800million over the same period.

This discrepancy drew suspicion from lawmakers, who questioned why taxes on stakes were increasing while those on winnings were dropping.

 "If there's more betting, there should be more winnings. This mismatch suggests possible manipulation of declared winnings by betting companies,” said the finance and national planning committee chair Kimani Kuria.

For Instance, KRA data shows that between July 2024 and March 2025 tax earnings from the staked amounts recorded a consistent increase throughout the nine months.

However, the taxes from winnings recorded a consistency in downward trend compared to a similar period last year.

In July 2024 for example an Excise tax of Sh866 million that was earned by Kenya Revenue Authority from betting activities, equated to a betting amount of Sh5.77 billion.

On the contrary the data by KRA shows that in the same month only Sh345 million was paid as withholding tax, which was a 27 per cent drop compared to the amount paid in the year before.

September emerged as the month wit the highest staked amount in the nine-month review period.

This saw KRA net Sh1.326 billion in Excise duty equivalent to Sh8.84 billion in stakes. This was closely followed by December where the taxman collected Sh1.268 billion- equivalent to a stake of Sh8.45 billion.

MPs raised concern over the increased trend where those betting have consistently been staking over Sh8billion monthly since September 2024 to March 2025.

KRA Chief Manager for betting and gaming Joseph Otieno explained that improved compliance was driven by a shift from manual to automated systems, that had boosted revenue.

Otieno acknowledged the decline in withholding tax on winnings, attributing it to variations in betting odds, which determine payout levels.

“But I agree with you that, as you say, there has been trouble and there needed to have been increased winnings. But you get to realise that the winnings are increasing, but not at the rate that the mistakes are also increasing<" he explained.

This he attributed to the variations of the odds, which, to a wide extent, he said  is an area that is quite widely supervised by the Betting Control Licensing Board.

KRA revealed that from July 2024 to March 2025, the government collected Sh19.6 billion in taxes from gambling activities—marking a 15 per cent increase compared to Sh17 billion collected over the same period the previous year.

Homabay Town MP Peter Kaluma questioned, how the betting firms managed to make huge profits yet they had raised objections to the Excise tax.

Karachuonyo MP Adipo Kuome challenged the taxman to consider societal good to just revenue collection.

"We’ve seen young people lose everything, even committing suicide. Taxation should balance revenue generation with social protection," said Kuome.

Questions were also raised about whether all betting companies operating in Kenya are domiciled locally, and if KRA has systems in place can monitor offshore-based entities.

MPs called for stricter oversight and suggested that the Betting Control and Licensing Board ensures transparency in how winnings and stakes are declared.

Parliament has demanded a detailed analysis of specific games, such as Aviator and Jackpot, to assess compliance.

The KRA has also been tasked with investigating whether foreign-based betting firms operating in Kenya are evading taxes.

The move was followed by a release  of a list of offshore betting firms operating in Kenya illegally.

The committee requested detailed data and responses to specific queries on betting trends, the impact of taxation on employment, and mechanisms to track offshore gambling platforms.