The Nairobi County government tabled a proposal that if approved would see the Kenyan capital receive a 30% share of the revenue generated by its legal casinos. The proposal is part of the Finance Bill 2018, which was introduced to Kenya’s National Assembly earlier this week.
There are 23 registered casinos in the capital city, according to official data. They are licensed and regulated under the provisions of the Betting, Lotteries, and Gaming Act of 2017 and their activity is overseen by the Betting Control and Licensing Board.
However, it is understood that the Nairobi County does not receive a share of the revenue generated by the gambling venues within its limits and that tax revenue contributions go to the national government.
The proposal for Nairobi receiving a share of its casinos’ annual revenues came as part of the local government’s attempts to secure revenue sources for the 2018-19 financial year. Nairobi County officials are looking to secure funds for a planned KES32 billion annual budget.
Kenya’s casino gaming sector has been on the rise over the past several years. The country’s licensed casino-style gambling venues generated the total amount of KES2.3 billion in revenue last year.
Nairobi County’s revenue sharing proposal comes four years after a similar plan was introduced by local lawmakers but was struck down by the High Court, following a complaint by a casino patron who had argued that the move would result in customers being subjected to double taxation.
Kenya’s New Gambling Tax
Kenya’s gambling industry has been making the headlines over the past year mainly due to the introduction of a 35% tax on all types of gambling revenue. The taxation regime took effect on January 1 and was part of the Betting, Lotteries, and Gaming Act. The legislative piece was approved by Kenyan MPs and President Uhuru Kenyatta last summer.
The country thus effectively became the most expensive African jurisdiction for licensed operators to provide their services in. Aside from the 35% tax on revenue, bookmakers also pay a 30% corporate tax and are required to contribute 25% of their sales to social causes.
Following great pressure from the betting industry, Kenyan MPs proposed earlier this year to replace the 35% rate with a 15% one, but the move was rejected. The proposal also included burdening customers with a 20% tax on their winnings, but that provision was, too, voted down.
Prior to January 1, betting companies had to pay a 7.5% tax on their revenues, casino operators were taxed at 12%, and lottery-like products and raffle competitions shared 15% of their revenue. Following the introduction of the unified gambling tax, the Pambazuka National Lottery, which had been launched only 18 months prior, had to shutter its operations thus being the first victim of the newly introduced regime.