Row over Kenyan gambling taxation intensifies

The Kenya government’s controversial imposition of a 35 percent tax rate on gambling operators (see previous reports) was back in the local headlines over the weekend when the Pambazuka National Lottery announced the suspension of sales in protest at the radically increased tax rate.

Launched just 18 months ago by Bradley Kenya, the PNL was among those who challenged the government’s approval of the tax increase late last year in a court action which the gambling industry lost.

The lottery saw its tax burden increased from 5 percent to 35 percent under the new legislation.

In its weekend announcement, the lottery advised that it was halting sales and operations until a “sustainable” regulatory and tax structure was established in the country, but that its winners would be given until April 7 this year to claim their prizes.

Management noted in the statement that operating a viable lottery is not possible in an environment where a corporate tax rate of 30 percent is levied, along with the 35 percent gambling tax and a requirement to donate 25 percent of profits to social upliftment projects. This meant that PNL’s operational expenses before costs had risen 115 percent, the statement explained.

The PNL shutdown follows the suspension of sports sponsorships by SportPesa and protests from a number of sports clubs and associations demanding that government reconsider the prohibitive tax rate and engage with impacted entities on the issue.

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