The new tax bill in Kenya reopens an old policy question: how far the government can raise betting taxes without pushing players away from licensed platforms. Under the Finance Bill 2026, 20% would be charged on winnings for both resident and non-resident players. The proposal would reverse last year’s shift, when Kenya removed taxation of winnings and focused instead on gambling withdrawals and wallet activity.
Legal experts at Cliffe Dekker Hofmeyr noted that the bill would return Kenya to the earlier tax position before the Finance Act 2025 removed taxation of winnings. Under the proposal, the 5% withholding tax would apply to withdrawals. A 20% withholding tax would apply to winnings earned by both resident and non-resident players.
New Rules Target Gambling Wallets
The proposal seeks to regulate how gambling value flows through digital wallets. In the Kenyan gambling industry, mobile wallets are extensively used, along with fast deposits and withdrawals. Consequently, wallet definitions are critical in the proposed bill.
The draft bill also brings back a legal definition of “winnings”. According to CDH, the bill defines winnings as payouts from a licensed gambling operator, lottery, or prize competition, excluding the original stake.
This definition is significant for operators as it implies that taxes would apply to the gain, not the total amount received by the gambler following a transaction. However, the final cost for users could feel higher if the tax is combined with withdrawal charges and other existing deductions.
Broader Definitions Close Payment Gaps
The Finance Bill 2026 also tries to capture gambling value that does not move as simple cash. According to CDH’s review, it defines deposited amounts expansively to mean any money or value transferred, credits, chips, tokens, cash-equivalents, and similar items used for betting or gambling.
The wording reflects how online gambling platforms now handle account balances. A player may move money through a wallet, turn it into platform credit, and withdraw it later. The bill would make it harder to argue that certain forms of gambling value sit outside the tax framework.
In addition, horse racing would lose its previous excise-duty exemption. CDH says the activity would be subject to excise duty at 12.5% of the amount wagered or staked.
Market Pressure Could Rise
For the government, the bill aligns with its broader strategy for increasing revenue collection. Kenya has been making efforts toward widening its tax base and regulating digital transactions. However, for licensed operators, the risk involved is that the high cost of taxes could lead to licensed operators becoming less attractive. That’s because players have become used to comparing payouts within seconds.
That is the key policy conflict. The Kenyan government can collect extra tax revenue from legal gambling only if players stay inside the regulated market. On paper, the legislation could help with better tax compliance. The true impact of the tax rule would be determined by player behavior after implementation. A clear tax rule is useful. A tax rule that pushes activity into weaker oversight would create a new problem for regulators.
