Kenya re-introduces 20% excise duty on betting stakes

Kenya's National Treasury has passed a new 20% excise duty on betting stakes, impacting the gaming industry in the country. The gaming sector in Kenya has been on a steady rise, with a growing interest in game development, eSports, and merchandise. In 2018, the industry spent around $3 million on game accessories, including consoles, games, and related items. The gaming market is expected to reach $153 million by 2023, driven by increased awareness and interest in various aspects of the gaming industry. Investors in the gaming sector in Kenya are diversifying, with a focus on merchandise, consoles, and game-making equipment. The growing player-centric approach in gaming has led to a demand for customized merchandise and game-related products. However, challenges are emerging with the re-introduction of the 20% excise duty on betting stakes. The betting industry in Kenya has faced scrutiny due to concerns about addiction and irresponsible gambling. In response to public outcry, the government imposed a 20% tax in 2019, leading to the exit of major players from the market. The tax income to the Kenyan Revenue Authority decreased, prompting a suspension of the duty in 2020 to attract investors back into the sector. The recent re-introduction of the excise duty includes a new 7.5% tax on placing bets, affecting both bettors and betting companies. This move may lead to instability in the market and could see players like SportPesa exiting once again. The ambiguity in the definition of the excise duty raises concerns for the gaming industry, as it could potentially impact game developers, causing increased costs and affecting profitability. Denis Mbuthia, the Lead Game Designer at Adala Studios, highlighted the challenges faced by game developers due to the lack of clarity in the tax laws. The gaming industry is at risk of being indirectly impacted by the excise duty meant for the betting sector. Clear definitions and regulations are crucial to prevent unintended consequences, such as additional taxes on gaming equipment and services. The gaming industry in Kenya offers promising opportunities for growth and innovation, but the re-introduction of the excise duty on betting stakes poses a threat to its development. Stakeholders in the gaming sector are calling for a more nuanced approach to taxation to ensure sustainable growth and investment in the industry.