The Rise of Gambling in Kenya: Factors Driving Its Popularity

As highlighted in a report from Kenya, gambling is becoming an increasingly popular activity in Africa, especially among the youth, many of whom see it as a reliable source of income. Several factors contribute to this growing trend:

1. Economic Hardships and Unemployment

2. Easy Access to Betting Sites

3. The Influence of Online Gambling Platforms

1. Economic Hardships and Unemployment

Young people are drawn to gambling due to economic hardships, high unemployment rates, and limited access to formal employment opportunities. Many see betting as a way to earn a living, especially when other options seem out of reach.

2. Easy Access to Betting Sites

With the widespread availability of smartphones and the internet, betting sites are just a click away. This easy access encourages participation, especially among the younger demographic, who are increasingly engaging with online platforms for betting activities. Websites like Ke-Bet.com have become popular choices for many Kenyans, providing an accessible platform for placing bets with minimal barriers.

3. The Influence of Online Gambling Platforms

The rise of online gambling platforms has simplified the betting process, making it more accessible to the youth than ever before. With just a smartphone and an internet connection, they can place bets at any time, which has contributed to the rapid increase in gambling activities.

This trend is supported by the FinAccess Household Survey, conducted by the National Bureau of Statistics in Kenya. The survey states that:

"Gaming companies continue to use mobile phones and mobile money to reach a broader audience through gambling, particularly sports betting."

The report also notes that 11.2% of respondents survey reported actively participating in betting. Of these, 14.4% live in urban areas, while 8.9% reside in rural areas. The highest activity was observed among young men aged 26 to 35 years (15.2%), followed closely by men aged 18 to 25 years (14.3%).

Spending on Gambling

The survey further highlights the amount of money Kenyans are spending on gambling. On average, respondents spent 1,825 Kenyan shillings on betting. Urban residents spent more (2,125 shillings) compared to rural residents (1,481 shillings). Men spent more on average (1,876 shillings) than women (1,623 shillings).

The report reveals that 10.9% of respondents view gambling as a legitimate way to earn money, with a higher perception among urban dwellers (11.9%) compared to rural respondents (10.1%). The consensus was even stronger among men (13.7%) than women (8.2%), and the 18–25 age group had the highest belief in gambling as a source of income (13.4%).

Regulatory and Tax Considerations in Kenya

Foreign Exchange Controls

There are no foreign exchange controls on transferring cash into or out of Kenya. However, according to Section 33H of the Central Bank of Kenya Act, any payment made, whether in Kenya or to a person outside the country, must be processed through a bank or microfinance institution authorized by the Central Bank of Kenya.

Tax Implications for Transferring Cash

Excise duty is imposed on money transfer services. The duty includes:

• 20% on commissions charged for money transfer services by banks, money transfer agencies, and other financial service providers.

• 12% on commissions charged by mobile network operators for money transfer services.

Tax Implications for Remote Trading

Kenya also imposes taxes on remote trading activities. Corporate income tax is levied at 30% for residents and 37.5% for non-residents on income from digital marketplaces, provided the income is considered to have been earned from Kenya under the Income Tax Act. Additionally, Value Added Tax (VAT) is charged at 16% for businesses engaged in online trading, electronic networks, or digital platforms, with the activities conducted within Kenya.

Section 8 of the Value Added Tax Act No. 35  stipulates that the supply of services is deemed to occur in Kenya if the supplier’s business is located in the country. If the supplier’s business is outside Kenya, the services are considered supplied in Kenya if the recipient is not registered and the services are electronic and provided in Kenya at the time of supply.

Other Applicable Taxes

Other taxes applicable to gambling activities include:

• Excise Duty: Charged at 7.5% on the amount of bets or wagers placed on gambling and lotteries.

• Income Tax: Levied at 20% for both residents and non-residents on gambling and betting winnings.

Gambling in Kenya is clearly on the rise, driven by economic necessity, accessibility, and the ease of participation in online platforms. As more young people embrace betting as a way of life, the government continues to regulate and tax these activities, ensuring that the sector is appropriately monitored.