Court upholds additional betting taxes, rejects double-taxation claim » Capital News

NAIROBI, Kenya, Aug 13 — The High Court in Kakamega has upheld the legality of taxes imposed on betting stakes and winnings, dismissing a constitutional petition that claimed the levies amounted to double taxation and violated the Constitution.

In a judgment delivered by Justice Stephen Mbungi on Wednesday, the court affirmed provisions of the Excise Duty Act, 2015 — as amended by the Finance Act, 2023 — which introduced a 12.5 per cent excise duty on the amount wagered or staked by persons participating in betting activities.

The petition, filed by Edward Okwama in Constitutional and Human Rights Petition No. E016 of 2023, argued that the excise duty, coupled with a 20 per cent withholding tax on winnings, was unconstitutional, discriminatory, and amounted to arbitrary deprivation of property.

Okwama named Milestone Gaming Limited, Standard Global East Africa Limited, the Kenya Revenue Authority (KRA), and the National Assembly among the respondents.

Justice Mbungi ruled that the excise duty on stakes is a consumption tax under the Excise Duty Act, while the withholding tax on winnings is an income tax under the Income Tax Act — meaning they apply to different taxable events.

“The two taxes are imposed on different events — placing a bet versus winning — and therefore do not constitute double taxation,” he said.

“Paragraph 4A of Part II of the First Schedule of the Excise Duty Act, 2015 as amended by the Finance Act, 2023 is NOT in contravention of Article 2(4) of the Constitution.”

The court noted that the taxes were lawfully enacted, followed due process including public participation, and served dual purposes — revenue generation and discouraging gambling.

On discrimination claims, Justice Mbungi held that the law applies uniformly to all bookmakers and punters, treating similar activities consistently.

Voluntary

He further stated that betting is a voluntary activity and players can avoid the taxes by choosing not to participate.

Addressing property rights concerns, the court found that once a stake is placed, ownership transfers to the bookmaker, meaning the tax does not unlawfully deprive players of their property.

The ruling also clarified that the 12.5 per cent excise duty on stakes is distinct from the Gross Gaming Revenue (GGR) tax under the Betting, Lotteries and Gaming Act, which is levied on operators rather than punters.

“Gross Gaming Revenue is a distinct tax just like excise duty. It is levied on betting companies, while excise duty is levied on punters. Therefore, it cannot amount to double taxation,” Justice Mbungi said.

The court dismissed all the declarations and orders sought by the petitioner, terming the case “without merit,” but ordered each party to bear its own legal costs as the petition was brought in the public interest.

The ruling reaffirms the government’s authority to tax betting activities as part of broader efforts to regulate the industry and generate public revenue. Punters and industry players have 30 days to appeal.