In a significant intervention before parliament, Kenya’s Gambling Regulatory Authority (GRA) has strongly urged lawmakers to completely reconsider plans to reintroduce a 20% withholding tax on gambling winnings.
The regulatory body warned that the measure would be fundamentally impossible to enforce and would introduce severe operational confusion across the domestic iGaming sector.
The Impracticability of Taxing Non-Cash Rewards
The controversial fiscal proposal, contained within the text of Finance Bill 2026, seeks to reintroduce a strict withholding tax targeting winnings from corporate prize competitions and short-term lotteries. The bill aims to reverse the successful structural reforms passed in 2025, which shifted the country’s tax net toward cash deposits and withdrawals.
During formal hearings held before the National Assembly’s Finance and National Planning Committee, the GRA presented extensive data demonstrating that the draft legislation fails to reflect the underlying operational realities of commercial promotions. The authority asked Parliament to remove the definition of “winnings” from the gambling framework altogether, citing implementation friction.
Kenya’s GRA Director General Peter M. Karimi informed the committee that treating marketing promotions identically to real-money sportsbooks is a severe legal misclassification:
“Prize competitions are primarily marketing promotions where players do not even wager a stake.”
According to comprehensive submissions first reported by People Daily, the authority elaborated that forcing operators to calculate and collect a 20% withholding tax on non-cash promotional rewards, such as electronics, household consumer goods, spa treatments, or automotive vehicle servicing is:
“…practicably not enforceable.”
Demanding a Predictable, Cash-Only Deposit Net
The regulatory body told MPs that attempting to tax anything beyond standard cash deposits would overcomplicate the system and drive down compliance rates. While lawmakers are considering expanding the baseline tax definitions to include chips, tokens, and digital credits, the GRA noted that these assets frequently originate from internal operator marketing campaigns or risk-free bets, meaning they do not possess a true cash value. Adding them to the base would make enforcement messy, unpredictable, and highly litigious.
Instead, the GRA is demanding that Parliament keep the regulatory environment simple, stable, and predictable by focusing the tax net exclusively on cash deposits routed into a player’s digital wallet from any source. The regulator proved that the current cash-based deposit and withdrawal levy structure is already working exceptionally well.
Total gambling tax collections expanded by 11% to reach Ksh 28.45 billion (approx. US$ 220 million) by April 2026, trending up from the Ksh 25.24 billion (US$ 195 million) gathered during the prior-year period. This substantial yield curve demonstrates that the 2025 deposit levies expanded the state’s tax base without slowing the organic growth of the sector. Finance Bill 2026 remains under active parliamentary review following the formal closure of public submissions on May 25.
