Casinos and games of chance are controlled by the Betting Control and Licensing Board (hereinafter referred to as “the Board”), which is established by the Betting, Lotteries and Gaming Act, Chapter 131 Laws of Kenya (hereinafter referred to as the “Act”). Executive Order No. 2 of 2023 issued on 2nd November, 2023 placed the Board is under the Executive Office of the President. It is charged with the responsibility of controlling and licensing of betting and gaming premises, facilitation of tax collection, authorization of public lotteries and prize competitions, inspection and elimination of illegal gambling.
Definitions
The Act defines a Casino as means a private club, or a room in a club, hotel, or other establishment, where gambling takes place and a gaming premises as premises which are kept or used (whether on one occasion or more than one) for gaming, and to which the public has or may have access for the playing therein of a game of chance, whether the game of chance be an unlawful game or not. A games of chance can be run in casinos. Additionally, gaming is defined as the playing of a game of chance for winnings in money or money’s worth.
Issuance of an operating license by the Board
Section 46 of the Act bestows the Board the power to issue a license authorizing a person to organize and manage gaming on premises to which the public may resort for the purpose of playing lawful games. A licence or permit issued under the Act is valid for a period of one year. Section 9 of the Act provides as follows;
“Every licence or permit issued under this Act shall, unless therein otherwise provided, expire on the 30th June next following the date of issue”
The license and permit may be renewed or varied each year by making an application for renewal to the Board in accordance with Section 5(1) of the Act which provides that;
“A person who desires to obtain, renew or vary a licence or permit under this Act shall make application to the Board in the form and manner prescribed.”
As stated above, the Board is in charge of the license issuing process and has to deliberate on the applications. The decision making process will include due diligence on the applicant’s criminal records, investments, business activities, financial status, among others. It is however important to note that section 62 of the Act give an aggrieved applicant the right to appeal the decision of the Board at the High Court’s Commercial & Tax Division. There is no requirement as to the capital that the Applicant must hold, though the Board conducts investigations into the Applicant’s background and investments, to determine among other things, the financial capability of the Applicant to effectively operate the business.
The applicant must fill a Probity form, detailing what business ventures it undertakes, the investments, what it intends to invest in, prior experience, among others. The Applicant will also be required to produce a Certificate of Registration of a Business or Certificate of Incorporation of a Company in case the applicant is a body corporate.
Before issuance of the license, Section 5(3) (ii) of the Act provides that the Board shall send a copy of the application for the licence to the local authority within whose jurisdiction the applicant proposes to conduct his/its business and give the local authority reasonable opportunity to object to, or make recommendations with respect to the application. Section 7 of the Act provides that the licensee must state the precise location and extent of the gaming or betting premises. The Board endorses its conditions on the licence or permit. Any transfer of the business to premises other than those authorized must be approved and authorized by the Board. The Board does not have any specific stipulations as to the size and/or surface area of such gaming premises, but the same should be big and spacious enough to accommodate all the gaming machines and other activities in a casino. Section 5(3) (i) of the Act states as follows;
“…no licence or permit shall be issued …unless and until the Board has satisfied itself that …the premises, if any, in respect of which the application is made are suitable for the purpose.”
Type of Applications by a Casino or Gaming Premises to the Board
Application for Public Gaming License; the application is in a standard form (Form 13A) under Section 46 of the Act,
Application for Renewal of Public Gaming License; the application is in a standard form (Form 13B) under Section 5(1) of the Act,
Application for Gaming Machine Permit; the application is in a standard form (Form 13B) and is made under Section 54 of the Act, which states as follows;
“The Board may, subject to any regulations made under this Act, issue a permit authorizing the use of a gaming machine on premises approved by it.”
Applicable Fees
Licence Fee
The licence fee is set out in the Second Schedule of the Act as follows;
- Application fee of Kenya Shillings One Million (KShs, 1,000,000.00) which is paid once and is non-refundable even where the Board rejects the licence application;
- Licence grant fee of Kenya Shillings Three Million (KShs, 3,000,000.00) which is only paid once and may be refunded if the applications are rejected by the Board;
- Annual licence fee of Kenya Shillings Five Hundred Thousand (KShs. 500,000.00) which is paid annually;
- Licence renewal fee of Kenya Shillings Twenty Five Thousand (KShs 25,000.00) which is paid upon each licence renewal; and
- Investigations fee of Kenya Shillings One Million (KShs, 1,000,000.00) which is paid once and is non refundable.
Security Fee
Section 6(1) of the Act provides for a security fee of the sum of Kenya Shillings Forty Thousand (KShs, 40,000.00). Section (64) of the Act further gives the Board has powers to vary and/or increase the amount payable as security taking into consideration scale of the applicant’s business.
Gaming Machine Fee
The Board has a stipulation that not more than two (2) gaming machines are to be made available for play in one building. Section 54 (2) of the Act states that;
“A permit for a gaming machine on premises approved by the Board shall be subject to such conditions as the Board may impose and to the following conditions-
- Not more than two gaming machines are made available for play in any one building…”(Emphasis added)
The fees are payable even where the machines are in a licensed casino or any licensed gaming premises. The gaming machine fee is as follows;
- Application fee of Kenya Shillings Fifty Thousand (KShs. 50,000.00) per machine payable once;
- Licence grant Fee of Kenya Shillings Two Hundred Thousand (KShs. 200,000.00) per location and payable once;
- Annual licence Fee of Kenya Shillings Fifty Thousand (KShs. 50,000.00) per machine payable annually;
- Licence renewal fee of Kenya Shillings Ten Thousand KShs 10,000.00 per machine payable upon each renewal; and
- Investigations Fee of Kenya Shillings One Million (Kshs. 1,000,000.00) payable once.
Amusement Machine Fee
- Application fee of Kenya Shillings Two Hundred and Fifty (KShs. 250.00) per machine payable once; and
- Annual License Fee of Kenya Shillings Two Thousand (KShs. 2,000.00) per machine payable annually.
Taxation
Some of the various tax payable with respect to gaming business incluide:-
Custom Duty; The Customs and Excise Duty Act (Cap 472 of the laws of Kenya) imposes excise duty on gaming at seven-point five percent (7.5%) of the amount wagered or staked. The 7.5% percent was a reduction from the 20% introduced by the Finance Act, 2019.
Entertainment Tax; Section 46(4) of the Act provides that where an admission fee is charged for persons resorting to gaming premises, it shall be subject to payment of entertainment tax.Section 3 of the Entertainment Tax Act (Cap 479 of the laws of Kenya) provides that entertainment tax shall be payable at the rate of 18%. The tax is payable in either of the following manners:-
Income Tax; this is the tax chargeable on the income derived from the business and is current at 30% for resident companies and 37.5% for non-resident companies
Turnover Tax; There is an additional turnover tax on lottery and gaming at 15%
This write-up is for informational purposes only and should not be construed as a legal opinion. If you have any queries or need clarifications, please do not hesitate to contact Gregory Makambo, Partner, (gmakambo@makambolaw.com), Kelvin Mwaniki, (k.mwaniki@makambolaw.com) or your usual contact at our firm, for legal advice.