How a bet is taxed in Kenya, from the deposit to the payout

Where does tax touch an online bet?

Section 69 of the Gambling Control Act, 2025 says an online gambling transaction starts when a player deposits money into a gaming account and ends when the player withdraws money from it. Kenyan tax law hooks onto those two ends. Excise duty attaches to the deposit, and withholding tax attaches to the withdrawal.

What happens in between, the stake and its settlement, carries no separate charge on you under the current wording. How the deposit duty replaced an older duty on stakes is told in excise duty on betting stakes in Kenya.

Step 1: what happens to the deposit?

Paragraph 4A of Part II of the First Schedule to the Excise Duty Act charges betting at five percent of the amount deposited. Since 1 July 2026, under section 36 of the Finance Act, 2026, that means any amount deposited for betting purposes, including money's worth that the operator itself makes available.

KRA's notice on the Finance Act, 2025 gives the operator one day: betting and gaming excise is due within twenty-four hours after the day's transactions close. The Act does not say whether the 5% must come out of your own money, so compare the amount credited with the amount sent. The payment side is set out in how M-Pesa deposits to a betting account work.

Step 2: is the stake or the result taxed?

Section 71(1) of the Gambling Control Act sets the minimum online bet at twenty shillings. The glossary explains what counts as a stake in betting. Placing the stake and settling the bet trigger no tax on you under the law as it now reads.

Section 70(1) requires a licensee to credit a monetary prize to your account within two days of the win. Once credited, the money is part of your betting balance and has not yet met withholding tax.

Step 3: what tax does the operator pay?

The operator pays a tax of its own on what it keeps. KRA's FAQ page on betting, gaming and lottery tax says betting tax is charged at 15% of the revenue generated from betting. The page says it must be remitted by the 20th day of the month after collection.

The legal base sits in the repealed Betting, Lotteries and Gaming Act. Section 121(6)(a) of the Gambling Control Act keeps sections 29A, 44A, 55A and 59B of that Act, on betting, gaming, lottery and prize competition tax, in force until new provisions are enacted.

KRA describes gaming revenue as gross turnover less the amounts paid out to customers as winnings, and gives gaming tax as 15% too. These are business taxes on the operator, and none of them appears as a deduction on your slip or your withdrawal.

Step 4: what is taken when you withdraw?

The Income Tax Act defines withdrawals as any amount of money, cash equivalent or money's worth paid or disbursed to the account of a player by a person licensed under the Gambling Control Act. Head B of the Third Schedule sets the rate for residents in paragraph 5(i): "in respect of withdrawals made by punters, five percent". Paragraph 3(i) sets the same 5% for non-residents.

The operator deducts the tax as the payer under section 35(3)(h), or section 35(1)(i) for a non-resident. Section 35(5) then gives it five working days to remit the amount and requires a certificate to you showing the payment and the tax deducted. Under section 35(5A) the Commissioner pays this tax into the Sports, Arts and Social Development Fund.

The definition does not split profit from your own money coming back. On its face the 5% applies to the full amount withdrawn, whether or not the bet won. Limits and mobile money fees on the way out are covered in M-Pesa betting withdrawal limits and charges.

Illustrative example: one bet from deposit to payout

Illustrative example. You send KES 1,000 to a licensed operator, place one KES 500 stake at decimal odds of 3.00, and then withdraw your whole balance. In this example the operator recovers the excise from the deposit; an operator that carries the duty itself would credit the full KES 1,000.

In the winning column the bet returned KES 1,500 on a KES 500 stake, and KES 147.50 of the cycle went in tax. In the losing column KES 427.50 of the KES 1,000 sent comes back, and withholding still applies to the KES 450 withdrawn.

Is 20% still taken from winnings?

Not from betting withdrawals under the law as at 1 July 2026. Section 2(e) of the Finance Act, 2026 inserted a narrow definition: winnings means a pay-out from a lottery or prize competition by a person licensed under the Gambling Control Act. Section 21 of the same Act added a rate of twenty per cent for winnings to paragraphs 3 and 5 of Head B of the Third Schedule.

Money a betting operator pays to your account therefore falls under withdrawals at 5%, while a lottery or prize-competition pay-out is winnings at 20%. Section 10(1)(o) of the Income Tax Act treats winnings as income accrued in or derived from Kenya.

KRA's FAQ page still says the Tax Laws (Amendment) Act reintroduced withholding tax on winnings at 20%, with a broad meaning that covers betting, lotteries, gaming and prize competitions. That wording predates the 2025 and 2026 changes to the Income Tax Act and does not match its current text.

What this guide does not cover

The Third Schedule entry for withdrawals does not carry the words "final tax", which some neighbouring entries do, and section 76A only states the general rule for final taxes. This guide does not say whether a withdrawal must also go on an income tax return; KRA can answer that for your own case.

Fees charged by M-Pesa or Airtel Money are not taxes and sit outside this walk-through. For the Act behind the operator duties named here, see the Gambling Control Act, 2025 explained for bettors.