When Treasury Cabinet Secretary Henry Rotich hinted he would reintroduce gaming tax, betting was far from the phenomenon it is today.
A year after the CS made the remarks in Parliament, betting firms have quickly snowballed and names like SportPesa are on everyone’s lips.
This is despite the new levies that have done little to slow down the unanticipated growth in sport betting.
On this backdrop, there is a likelihood of further taxes being unveiled today on gaming to finance the widening budget deficit.
Mr Rotich will this afternoon present his fourth budget and has slapped a gaming tax that would be a charge on the total revenues paid by the ‘gamers’.
“To promote growth of this sector and enable it to play its role in encouraging innovation, creating employment and driving growth, I propose to re-introduce a simplifying gaming tax, which shall be a direct charge on the gross gaming revenue,” Rotich told the MPs when he presented the budget last June.
He described the potential of the gaming industry as untapped in creating employment but more significantly, “generating revenue for the Government”.
“I also propose to tax public lotteries at five per cent of the lottery turnover, and tax bookmakers at 7.5 per cent of the gross betting revenues,” he added.
INTRODUCED LEVIES
The CS also introduced levies on all prize competition whose costs of entry are ‘premium’, and are now taxed at 15 per cent of the total gross revenue.
Apart from the dozens of new millionaires that sport betting has created in the last year, many more gamers have lost out to betting. However, in the whole betting, Safaricom has emerged as a surprise beneficiary.
Most of the gaming companies are in partnerships with the mobile service providers to channel the bet amounts from their respective virtual money wallets, where Safaricom has more than 80 per cent market share.
In a recent interview, Safaricom boss Bob Collymore said sport betting was the most significant revenue stream in the reported earnings from MPesa.
“Sports betting is using MPesa a lot and had we not done this, we would have really struggled to meet capacity. That sector has now absolutely overtaken everyone else,” Mr Collymore said.
This is likely to be a sector the CS will dig into again with his eyes on finding resources to finance the Sh2.3 trillion-worth budget.
Kenyans transact more than Sh5 billion through MPesa every day; translating to nearly Sh2 trillion, the size of Mr Rotich’s budget last year.
Safaricom earns transaction fees every time a gamer sends money to the betting firm and subsequently any withdrawals for the winners; who are in thousands every day.
