Will New Fees Kill Nairobi's Lucrative Gambling Sector?
Nairobi is one of Africa's gambling hubs, but operators will face severe challenges with the introduction of new fees. The new regulations want to streamline the gaming industry in the pipeline, which is about to change. Gaming and sports betting industries generate billions of shilling, but it has been pretty unregulated. However, City Hall wants to bring order into this sector on the county level. Therefore, the Nairobi City County Betting, Lotteries, and Gaming Bill should regulate the industry and bring additional revenue to the county. But how will it affect the gambling sector overall?
What is the Nairobi City County Betting, Lotteries, and Gaming Bill?
The Nairobi City County Betting, Lotteries, and Gaming Bill is a regulative Act that aims to establish the control mechanism for gambling and betting. It will also define the licensing criteria and introduce fees that will hit all operators. The county will, therefore, pick a percentage of the revenue in this lucrative industry. Besides the regulative purpose, the Bill will establish different instances to put in place all the regulatory activities:
- Nairobi City County Betting, Lotteries, and Gaming Control Board
- A non-executive chairperson
- A chief officer
- The directorate
- The gaming inspector
The Nairobi City County Betting, Lotteries, and Gaming Control Board aim to define projects and programs for gaming and betting control within the Nairobi County. It would act as the authority but also have an advisory role. The board will promote the implementation of standards, norms, and national policies related to gaming, betting, and lotteries activities.
A non-executive chairperson should lead the board, and the governor is in charge of its appointment. The selected person should have a broad knowledge of the trade, business, gaming, and betting. The chairperson would have its assistant, a director, who would be in charge of gaming, betting, and lotteries. Besides these two roles, a chief officer would be responsible for compliance and security.
A directorate assists the board and is in charge of different tasks:
- Implementing policies and standards for all forms of gambling
- Controlling and regulating gaming activities
A director heads the directorate, and his role mainly focuses on issuing licenses, their approval, rejection, or cancellation. Besides that, the director is in charge of:
- Establishing and maintaining a central electronic real-time gaming monitoring system
- Establishing and maintaining a register of all gaming machines and devices in the county
- Investigating, monitoring, and evaluating compliance with policies and regulations
- Carrying inspections and enforcement
Last but not least, a gaming inspector is another instance proposed by the Bill. The gaming inspector will be in charge of inspecting all gaming activities. It has the power to conduct all necessary actions to prevent illegal gambling. Also, it should monitor the latest trends in the sector and report them to the director.
On the other hand, the operators are mostly interested in changes regarding the introduction of the entertainment tax.
How Would the Operators Be Taxed?
The Bill introduces a set of fees depending on the gambling activity. For instance, casino operators should pay an Sh100,000 grant fee for premises. They are due another Sh10,000 fee for application or renewal. Besides those, there are two other fees: an annual fee of Sh300,000 and an Sh200,000 transfer fee. You can find more information on the best online casinos in Kenya on this page.
According to the Bill, a sports betting operator would be charged an Sh600,000 grant fee for a betting premise. The application fee remains the same as for the casino operators – Sh10,000. The same figure sports betting operators should pay for renewal. The annual cost per premise stands at Sh30,000, while the sportsbooks should pay an additional Sh10,000 location fee.
A three-month bingo permit costs Sh30,000, while 15% of proceeds go to the County Lottery Distribution Trust Fund. Gaming draws permits, including lotteries and betting draws, fall to an Sh5,000 fee per draw. There is also an additional 10% entertainment tax on winning revenue.
A totalizator premises license brings different fees as well. There is a grant fee standing at Sh200,000, while an annual fee is Sh100,000. For an application or renewal, the organizer should pay an Sh10,000 fee.
The public lottery license is the most expensive one. It consists of the following fees:
- Grant fee at Sh4,000,000
- Sh1,000,000 application fee
- A renewal fee of Sh1,000,000
- An annual permit fee of Sh500,000
- The transfer application fee at Sh25,000
A local applicant is due an Sh500,000 application fee, while the figure stands at Sh1,000,000 for a non-domestic applicant. There is also an option for purchasing a three-month license. In that case, an operator should pay an Sh2,000 application fee in addition to Sh75,000 or 3% of projected ticket sales.
In the case of the prize competition application, an organizer should pay an Sh2,000 application fee. Besides that fixed amount, an applicant is charged 6% of the total budget. This amount is calculated as a sum of the cost of all prizes, production, design, and advertising costs.
The Act and Its Impact on the Gambling Industry
Although the Nairobi City County Betting, Lotteries, and Gaming Act impose higher taxes, the number of gambling operators continues to grow. There are over 20 gaming, betting, and lottery companies in the county, and the number won't stop there. The gambling industry in Kenya makes more than an Sh5 billion yearly turnover, which will keep growing.
The national government will issue the public gaming licenses, while the county government will be in charge of the betting premises. When it comes to lotteries, the national government will grant the permissions while the county government will supervise them.
According to City Hall's data, there are currently 23 registered casinos in Nairobi. Both online and land-based casinos are a great source of entertainment for many Kenyan people. Until now, only the national government benefited from the tax revenue from the gambling sector. With the newest Act, the county government can also count on income coming from casinos that operate in Nairobi.
According to the officials, the collected revenue will be spent on providing quality services to all Nairobi residents. Since the city population is projected to grow, these funds will serve to better service delivery. All present and future operators will need to comply with the Nairobi City County Betting, Lotteries, and Gaming Act framework. The Act should also address all challenges in the gambling industry.
The Act defines penalties for any illegal activities related to gambling. Therefore, anyone who operates gaming, betting, or lottery activities without permission commits an offense. Ones who advertise or promote unlicensed prize competitions could be fined up to Sh1,000,000 or up to five-year imprisonment. On the other hand, the participants in these illegal activities could face a fine of up to Sh50,000 or up to six-month imprisonment. The operation or use of unlicensed gaming or betting premises can lead to an Sh1,000,000 fine or up to five-year imprisonment.
Although the new Act brought additional fees for gambling operators, which should not be underestimated, it shouldn't have a devastating impact on the industry. The number of customers is expected to continue growing and drive the gambling sector forward. The operators' revenue shouldn't be affected a lot by the newly imposed fees, as the industry will continue generating high income.
On the other hand, the gaming, betting, and lottery sector should be better regulated, as several instances should drive, track, and monitor gambling activities in the country. Besides the Nairobi City County Betting, Lotteries, and Gaming Control Board, several governing bodies are established to issue licenses, ensure the industry remains regulated, and help the gambling sector to continue improving and growing in the times to come. We believe Nairobi will remain one of the most important East African gambling hubs, despite the extra costs for the current and future operators.