In a game-changing turn of events, Kenya’s betting industry is undergoing a transformation following a recent court ruling. The High Court, under the guidance of Justice Patrick Otieno, has delivered a verdict that has sent ripples across the betting industry, impacting ardent bettors and major industry stakeholders alike.

The crux of the matter lies in the long-standing 12.5% excise duty imposed on bets. Justice Otieno’s ruling has cast doubt on the legitimacy of this tax, ushering in a significant departure from the status quo.

SportPesa swiftly complies

SportPesa has swiftly responded to the court’s judgment. Justice Otieno directed that the excise tax not be collected until the application filed by a dedicated betting enthusiast, Mr Edward Okwama, undergoes a hearing and is resolved.

SportPesa has been instructed to refrain from deducting the excise tax from the wagers of betting enthusiasts while  the case is ongoing. This temporary conservatory order represents a pivotal aspect of Justice Otieno’s verdict. Recent withdrawals indicate that they have been exempted from the excise duty.

Inequitable taxation

Edward Okwama’s legal battle is grounded in his conviction that the current tax law is inherently unfair. It imposes a uniform levy on bets, irrespective of whether the bettor emerges victorious or faces defeat. He contends that this approach lacks alignment with fundamental taxation principles, asserting that excise duty should only apply when there are earnings or winnings.

“The inherent issue with this provision is that it subjects the applicant and fellow sports betting enthusiasts and participants to a 12.5% excise duty every time they place a bet or engage, irrespective of the outcome,” Mr Okwama argues.

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Furthermore, Mr Okwama highlights what he perceives as a double standard. He questions why the government mandates excise duty on bets when a similar principle is not enforced in other domains. He posits that this results in a scenario where bettors are effectively subject to double taxation, as they are also burdened with a 20% withholding tax on their winnings.

Justice Otieno has additionally mandated Mr Okwama to serve the betting companies, the Kenya Revenue Authority (KRA), and the Attorney General within a 14-day window. The case is slated for mention on 21st September 2023, and holds the potential to overhaul the betting landscape in Kenya.

The court’s decision, coupled with SportPesa’s proactive measures, has set the stage for a profound changes in the betting sector. The outcome of this legal battle promises to have sweeping ramifications, not only on the taxation of bets but also on the broader sports betting enterprise in Kenya.

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