A proposed tax on prize competition winnings has drawn opposition from the Gambling Regulatory Authority, which is now urging Parliament to drop the plan, saying it would be difficult to enforce and could make tax collection in the gambling sector more complicated.
Appearing before the National Assembly Departmental Committee on Finance and National Planning during stakeholder input on the Finance Bill, 2026 on Tuesday, the Gambling Regulatory Authority director general Peter M. Karimi said the proposed 20 per cent withholding tax on winnings from prize competitions and short-term lotteries does not fit well within the current operational system.
Karimi said many prize competitions are run as marketing promotions where participants do not place any stake, which makes taxation difficult, especially when rewards are not in cash form.
The regulator raised concerns that enforcing tax on non-cash rewards would be impractical under existing systems. It pointed to prizes such as household goods, electronics, shopping vouchers, spa treatments and car servicing, saying these fall outside easy tax tracking mechanisms.
“Enforcement of collection of tax on physical products for instance, household goods, electronics, shopping vouchers and services, spa treatment or car servicing won by a player is practicably not enforceable,” the GRA submitted to the committee.
The authority also rejected proposals in the Finance Bill 2026 that seek to redefine gambling deposits to include cash equivalents such as gaming chips, tokens and promotional credits. It warned that this would blur the line between real money deposits and promotional value given by operators.
According to the regulator, promotional credits and free bets do not always match actual cash value, and treating them as deposits would introduce unnecessary complexity into tax calculations and compliance monitoring.
Instead, the authority proposed that only actual cash deposited into a player’s wallet should be treated as a deposit, regardless of the source, saying this would help maintain a “simple, stable and predictable” tax system.
The regulator further proposed the removal of the definition of winnings from gambling rules and operational frameworks, arguing that past attempts to enforce similar measures have created challenges in implementation.
On the wider tax framework, the Gambling Regulatory Authority defended the current system, stating that reforms introduced under the 2025 tax amendments have already expanded the tax base without destabilising the sector.
Data presented by the authority, and supported by Kenya Revenue Authority figures, shows gambling tax collections rose by 11 per cent to Sh28.45 billion by April 2026, up from Sh25.24 billion in the 2024/2025 financial year.
The regulator attributed the increase to new levies introduced on gambling deposits and withdrawals, which it said have improved revenue performance.
Under the Finance Bill 2026 proposals, the government is seeking to reintroduce a 20 per cent withholding tax on gambling winnings while also widening the definition of taxable deposits to include chips, tokens and credits used in betting activities.
The Bill also includes wider tax compliance changes across sectors as part of efforts to raise more revenue for government operations.
The Gambling Regulatory Authority, however, maintains that further tightening of definitions around winnings and deposits could create enforcement gaps rather than close them, urging lawmakers to reconsider the proposed changes.