iGaming Industry
Kenya’s new tax on betting highest in region, says PwC
Experts say hike will kill gaming firms and call for review to protect investment
Consultancy firm PricewaterhouseCoopers (PwC) has revealed Kenya’s betting tax is the highest in the region and ahead of gaming hubs like the famed Las Vegas.
PwC says the new 35 per cent tax on all gambling revenues is higher compared to other African countries like South Africa which charges 9.6 per cent, Rwanda (13) and Uganda (20).
Neighbours Tanzania replaced corporate tax in the gaming industry with a six per cent tax on revenue as an incentive to attract more players to invest in the business.
Developed nations of Germany (five per cent), Las Vegas (6.5) and Canada (20) have significantly lower rates than the Kenyan one which became effective from January 1.
The United Kingdom levies 15 per cent as a conclusive tax for remote online gaming with no further levies. Companies established offshore are allowed to operate in the country.
The actual figures contrast sharply with what has been reported recently in local media claiming, for example, that the rate in the UK and other European nations such as Czech Republic, Belgium, Slovakia, Spain and Denmark is 50 per cent while in Germany the tax is at an astronomical 90 per cent.
Steve Okello, a Tax Partner at PwC, reckons that Kenya’s taxation is harsh on the nascent industry and could hurt the growth of related sectors and government revenues with the affected firms scaling back operations or relocating their businesses.
“I feel the tax change that is probably the highest in Africa looks discriminatory, you know one industry is being picked out and heavily charged,” said Mr Okello.
“We are likely to see lots of cutting back on expenditure if not closures in the industry that will affect overall tax growth,” he added.
Besides the blanket 35 per cent tax on revenues, lotteries pay 30 per cent corporate tax and dedicate 25 per cent of their sales to charities as a legal requirement before taking care of winnings and other operating expenses.
Betting firms say the tax hike will kill the fledgling industry and hurt supporting businesses including telecoms and media companies, which benefit from daily advertisements from the firms.
Safaricom #ticker:SCOM says mobile phone-based betting was driving revenue in its SMS business.
Kenya Revenue Authority (KRA) warned the tax hike will hurt tax collection from gaming firms.
Pambazuka National Lottery suspended operations on Sunday following the hike.
“The effect of the 35 per cent tax on all ticket sales is that the total cost of operations rises to 115 per cent and this before deduction of operations costs,” said the firm in a statement.
Analysts fear local gambling firms could relocate to offshore tax havens which offer low rates to attract capital investment.
“Betting is online and technology based and firms can move to low tax jurisdictions like Malta and Gibraltar and still operate from Kenya. The country will lose revenue in this event,” Mr Okello added.
High taxes have seen renowned betting firms such as Bet365, Betway and Betfair — whose services are accessible to the Kenyan market through their websites — operate from Malta and Gibraltar which cap their rate at one per cent of gross gaming revenue.
The Treasury said it hiked taxes more than four times to curb the growth of gambling, arguing that it was hurting the young and vulnerable.
Mr Okello said that since winners are not taxed, with the affected firms absorbing the huge hit, the higher tax rate will do little to curtail gambling.
He proposes a tax of 10 per cent on betting firms as ideal to stem the likelihood of affected entities closing shop in Kenya and relocating elsewhere.
Profitable blue chip firms at the Nairobi bourse will slide to losses if subjected to the 35 per cent tax.
KenGen will dip to Sh1.6 billion loss compared to a profit of Sh6.7 billion, while the Nation Media Group will book a loss of Sh1.1 billion from a profit of Sh2.4 billion.
“In my view, the 35 per cent tax on all collections would have been proposed as a final tax like rental income,” says tax expert Mwaniki Githinji.
“If when computing the net profit they are allowed to offset the 35 per cent as an allowable deduction, then it would be okay. However, according to the Income Tax Act, for purposes of arriving at the net taxable income, this is not an allowable expense,” he added.
That mirrors Tanzania and the United Kingdom that replaced corporate tax with a conclusive tax to boost investment. SportPesa has issued a notice to appeal a High Court decision that maintained the 35 per cent tax rate.
The betting firm says the higher tax is in breach of Article 201 of the Constitution that demands the public finance system promotes an equitable society where the tax burden is shared fairly.
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Source: EEGaming.
Bradley Khoury
eCOGRA Approved to Operate in Arizona, Indiana and Panama
eCOGRA, a leading international authority in Testing, Inspection and Certification services for the iGaming industry, has secured new regulatory approvals across three key jurisdictions: Arizona, Indiana and Panama. With these developments, eCOGRA strengthens its position in the U.S. and Latin American markets, offering excellence in compliance through their Quality, Speed, and Service promise.
This strategic expansion allows eCOGRA to conduct independent compliance audits and certification services in each region, addressing the growing demand for rigorous regulatory oversight in the fast-evolving global iGaming industry.
Securing approval in Arizona, where eCOGRA has now been licensed as an Event Wagering Ancillary Supplier, enables the International Testing Laboratory (ITL) to audit event wagering licensees in line with Arizona’s expanding regulatory landscape. Indiana, which introduced online sports betting in September 2019, has authorised eCOGRA to perform regulatory compliance audits, providing licensed operators with crucial assurance in meeting the state’s high standards.
In Panama, the Board of Gaming Control officially recognised eCOGRA as an Authorised Entity for Compliance Certification, specifically for slot machines and gaming software. This endorsement reinforces eCOGRA’s role as a trusted partner for operators seeking to meet stringent regulatory requirements in Latin America’s emerging iGaming sector.
“Our recent approvals in Indiana, Arizona, and Panama underline our dedication to continually expand our offering, to support our growing portfolio of clients with their global growth plans. We are committed to ensuring that we bring the same quality, speed and service that marks us out to both our clients and regulators in these dynamic markets,” said Will Shuckburgh, Group CEO of eCOGRA.
Bradley Khoury, Chief Technology Officer at eCOGRA, said: “Securing licensure as an Event Wagering Ancillary Supplier in Arizona and an Authorised Entity in Panama underscores our dedication to supporting responsible and sustainable iGaming operations. We are committed to driving trust and accountability within the industry by providing compliance solutions that uphold the highest standards.”
BetConstruct
BetConstruct to Showcase Latest Innovations at G2E Las Vegas 2024
BetConstruct, a global leader in the iGaming industry, is going to showcase its cutting-edge solutions at the highly anticipated Global Gaming Expo (G2E), taking place from October 7-10.
As the premier event for the global gaming industry, G2E serves as a hub for innovation, driving growth by bringing together industry professionals from around the world to foster business opportunities.
Taking place at The Venetian Expo in Las Vegas, this all-in-one event features both an education program from October 7-10 and an expansive expo hall running from October 8-10.
BetConstruct’s stand is 5230, where the team will showcase an exciting range of products, including the newly launched the Last Battle, a novel loyalty system that is the byproduct of BetConstruct’s commitment to innovation. The company will also demonstrate its comprehensive Sportsbook and Casino Suite, along with DECA, its next-level decentralised casino platform, and Umbrella, an AI-powered risk management solution. These offerings are designed to meet the needs of a diverse range of operators, ensuring seamless and engaging experiences for players across the regulated market.
Amusnet
Amusnet Sets the Stage for Global Gaming Excellence at G2E Las Vegas
Amusnet has announced its participation in the 23rd edition of G2E Las Vegas (Global Gaming Expo) at The Venetian Expo from October 7-10. As one of the largest expos globally, G2E provides a platform for the company to showcase products across its Online Casino, Live Casino, and Land-based verticals, positioning Amusnet as a prominent all-casino provider in the competitive iGaming industry.
“We are excited to attend G2E Las Vegas 2024 to present our latest online casino portfolio and Type S slot cabinets: our first-ever product series for Land-based casinos, designed to offer a competitive edge by combining Amusnet’s top-notch game portfolio with an immersive player experience. Our focus is on delivering solutions that maximize performance and cater to the evolving needs for both online and land-based casinos,” said Borislav Marinov, Head of Business Development, Land-based, at Amusnet.
Alongside its technical excellence, the premium Type S series showcases the company’s award-winning titles, including 20 Golden Coins, Extra Crown, Fruits & Gold, and Cocktail Rush. It also features Amusnet’s popular four-level bonus game, Jackpot Cards, along with other exciting features like Free Spins, Buy Bonus, Pick Me Bonus, and Symbol Upgrade.
Amusnet will host an activation featuring its premium slot cabinets at the upcoming expo, offering attendees the opportunity to experience the thrill of Type S in real time and win exciting gifts.
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