Even in Africa, Gambling becomes easy target for tax-seeking politicians

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One of the biggest challenges of operating a casino, either land-based or online, is the fickle nature of how politicians react to the reality of gambling.  As part of the so-called group of industries that fall into the ´sin tax´ category, politicians who are unable to raise enough revenues for their jurisdiction frequently look to sin industries as a quick and relatively painless way to bring in money.  There is usually very little fanfare or public outcry against sudden, and often drastic increases in taxes paid by gaming operators.

Kenya has joined the parade and has recently cranked up tax rates for casinos by increasing the special tax paid by gambling operators up to 35%.  While a 35% tax rate does not sound horrible, that is only until you realize that is the special gambling tax and occurs on top of the existing 30% corporate tax rate for all businesses.   This new 35% tax rate is a major increase over the current rates which average between 5% and 15% depending on the type of gambling the organization operates.

Unlike in many US states, in Kenya, they have specifically stated that the goal is not only to raise tax profits but to decrease the amount of gambling done overall.  With the rise of mobile devices and the availability of high-speed internet, online gambling among young people has increased drastically over the last few years and the government of Kenya sees it as a threat to their society.  This contrasts greatly to the USA where when politicians increase taxes against casinos, there usually is not type of moral message that goes with it since there is a bit of a tight-wire to walk to where you say something is harmful to society, but still, allow it to happen.  American politicians are more than happy to just take the tax revenues without making a stand on any moral issues of gambling itself.

What is happening in Kenya has already happened in a few countries around the world.  The governments are unable or unwilling to make something illegal that is currently legal, so instead, they increase the tax rate on those industries to the point where no company is able to operate in that environment.   This is less of a severe issue for online casinos, but for land-based casinos, the constant fear of new tax rates or new restrictions make capital investments a difficult and risky endeavor.