Kenya is considering significant changes to its gambling tax framework through the Finance Bill 2026, including the introduction of a 20% withholding tax on gambling winnings for both residents and non-residents.
The proposal forms part of a broader effort to increase government revenue and strengthen oversight of gambling and digital financial transactions. Public consultation on the bill began on 11 May and closed on 25 May, with lawmakers now set to review stakeholder feedback before moving forward with the legislation.
New Tax Framework Targets Winnings
If approved, the Finance Bill 2026 would amend the Third Schedule of Kenya’s Income Tax Act by imposing a 20% withholding tax on gambling winnings.
The proposal marks a shift from reforms introduced in 2025, which focused primarily on a 5% levy applied to gambling deposits and withdrawals. Legal experts noted that the latest proposal would effectively restore a tax structure similar to previous frameworks by reintroducing direct taxation on winnings.
In addition to the 20% withholding tax, the bill would maintain the 5% tax on withdrawals and broaden the definition of gambling deposits to include chips, tokens, credits, and other similar instruments used in betting activities.
Broader Definitions Aim to Close Loopholes
The proposed legislation also introduces more detailed definitions for key gambling-related transactions.
Under the bill, winnings would include payouts received from licensed betting, gaming, lottery, and prize competition operators, excluding the original stake. Withdrawals would cover any cash or cash-equivalent value removed from gambling accounts.
Lawmakers believe these definitions will help close regulatory gaps and ensure that all relevant gambling transactions fall within the scope of the tax system.
Balancing Revenue and Regulation
The gambling tax proposals form part of Kenya’s wider strategy to strengthen digital transaction oversight and expand public revenue streams.
As one of Africa’s largest betting markets, Kenya has experienced substantial growth in online gambling and sports betting, supported by widespread mobile payment adoption. Platforms such as M-Pesa have played a major role in accelerating digital betting activity across the country.
Industry Reaction Remains Divided
The proposed measures have generated mixed reactions from stakeholders.
Supporters argue that higher taxes and clearer regulatory rules could increase government revenue while improving transparency and accountability within the gambling sector.
Critics, however, warn that additional taxation may encourage players to use offshore or unregulated platforms, potentially reducing the effectiveness of regulatory oversight and limiting tax collection efforts.
As lawmakers review public feedback, the outcome of the Finance Bill 2026 could significantly influence the future structure of Kenya’s gambling market and taxation regime.
