Gaming firm BetLion has begun deducting 20 per cent on punters’ winnings despite a court order that stopped betting companies from making a deduction on winnings.
The court on April 11, 2019, restrained gambling and lottery firms from making 20 per cent deductions on bettors’ winnings pending hearing and determination of a civil case filed by a betting enthusiast.
But following a directive by Betting Control and Licensing Board and KRA, BetLion has said it will start pursuing gamblers for a share of their bet winnings in compliance with the state rules and regulation.
“BetLion has begun effecting the 20% withholding tax as prescribed by the Government,” BetLion said.
This means gamers will pay 20 per cent of the amount they have won from the gaming firm, irrespective of their winnings.
For example, if a gamer stakes Sh1000 in a game that has odds of 1.13 (1.13 X Sh1000)and wins, the person only gets sh130 as winnings.
A tax regime would therefore only tax the Sh130 which at the current withholding tax rate (20 per cent) mean KRA takes Sh26 and the gamer Sh104 plus his stake of Sh1000 bringing it to a total of Sh1104.
Also, note mid-June this year, National Treasury Cabinet Secretary Henry Rotich proposed a 10 per cent excise duty on the amount staked.
But before the new tax proposal on gamblers, betting firms shouldered all the burden of taxes as gamblers never paid anything when placing a bet.
And now gamers will pay 10 per cent of the amount they want to bet upfront in excise duty, irrespective of the outcome of their prediction – win or lose.
For example, placing a bet worth Sh100 would mean that the amount staked is only Sh90 while the Sh10 is handed over to the Kenya Revenue Authority instantly.
BetLion, which launched its operations in Kenya last year, is among seven betting firms whose licenses have been renewed by the Betting Control and Licensing Board (BCLB); and were notified on June 28 after fulfilling all conditions demanded by BCLB.
The taxman is demanding Sh61 billion from at least 27 betting firms in taxes before their operations can be stored amid protests the State was acting against a court ruling.
The government further suspended betting licenses of some of the firms including SportPesa, Betin (Harambee Stars’ partners) and betPawa among others.
The gaming firms have since gone to court to contest the decision. The High Court suspended the decision by Betting Control and Licensing Board (BCLB) to withdraw Betin Kenya’s licence.
However, the government has refused to abide by the court order.
According to legislators, money deducted from betting and lottery winners is meant to finance sports, art, culture development and universal healthcare.
