Betting firms are paying out less of staked amounts to gamblers, making it harder for punters to reap from the game of chance that has turned out to be a source of income for millions of Kenyans.

An analysis of data from the Betting Control and Licensing Board (BCLB) shows that payout ratios dipped to 72.8 percent or Sh43.7 billion last year from a high of 89.8 percent (Sh269.3 billion) in 2019.

The falling payout ratios have quickly taken away the shine from an industry that has, over the years, turned from a pastime to a source of income for millions of Kenyans seeking quick cash.

The betting stakes have also fallen in the period to Sh60 billion last year compared to a high of Sh299.7 billion in 2019.

BCLB attributes the drop in sales for the betting firms and payouts to gamblers to aggressive taxation regimes and stringent compliance enforced to cut the gambling craze.

“Because the country was progressively becoming a gambling nation, the severe compliance requirements put in place in 2019 to limit the gambling habit explains the recent trends,” the betting regulator notes.

Betting craze in Kenya has caught the attention of key State agencies, notably BCLB, the Treasury and Interior ministers, prompting the introduction of taxes and an increase of others to reduce the appeal of gambling. Sports betting is popular among the youth, with some funding their gaming addiction by taking loans from banks and digital lenders.

There have also been reports of punters committing suicide after losing all their money.

The government introduced an excise tax on betting stakes at the rate of 7.5 percent from July 1, 2021. This was in addition to the 20 percent withholding tax on every winning bet.

Excise tax on betting stakes was further increased to 12.5 percent from July this year, marking the continued onslaught on gamblers.

Besides gamblers, betting firms currently pay a gross gaming revenue — turnover minus winnings paid out— at a rate of 15 percent. They also pay corporate tax on profits at a rate of 30 percent.

The ratio of payouts to gamblers dropped to 76.3 percent (Sh27.8 billion) in 2020 but recovered to 78.1 percent or Sh55.9 billion the following year.

Betting firms made Sh36.4 billion in revenues in 2020—the year when BCLB records show that the number of active gamblers dropped to 1.4 million from 2.5 million in 2018 following the introduction of the 20 percent withholding tax on every winning bet.

The revenues that betting firms made, however, jumped to Sh71.5 billion in 2021 before falling to Sh60 billion last year.

A drop in revenues by the betting firms deals a blow to the Kenya Revenue Authority’s efforts to raise more revenue from the industry, given the number of taxes imposed on the companies.