Monday, 27 March 2023

FOREWORD

PREFACE

EXECUTIVE SUMMARY

TABLE OF CONTENTS

FOREWORD.................................................................................................................................... iii

PREFACE.......................................................................................................................................... iv

EXECUTIVE SUMMARY............................................................................................................... v

LIST OF TABLES............................................................................................................................ ix

LIST OF DEFINITIONS................................................................................................................. x

LIST OF ACRONYMS................................................................................................................... xi

1. PREAMBLE............................................................................................................................... 1
2. KENYA'S GAMBLING POLICY CONTEXT AND CHALLENGE................................ 4
   1. History of Gambling in Kenya...................................................................................... 4
   2. Gambling Policies and Legislation in Kenya............................................................. 6
   3. Who Gambles in Kenya?................................................................................................ 9
   4. Size and Structure of the Kenyan Gambling Market............................................. 13
      1. Size of the Kenyan Gambling Market.................................................................. 13
      2. Structure and Performance of the Gambling Sector in Kenya......................... 13
   5. Gambling Sector Taxation in Kenya.......................................................................... 16
   6. Contribution of Gambling to the Kenyan Economy............................................... 18
      1. Contribution to Tax Revenue Generation........................................................... 18
      2. Contribution to Employment Creation............................................................... 18
      3. Social Impact / Corporate Social Responsibility.............................................. 19
   7. Kenya's Gambling Policy Challenge......................................................................... 20
3. LESSONS IN TRANSFORMING THE GAMBLING SECTOR INTO A POSITIVE FORCE FOR SOCIAL PROGRESS................................................................................................... 21
   1. Policy, Legal and Institutional Regimes.................................................................... 21
      1. Responsible Gambling Framework...................................................................... 21
      2. Gambling Taxation Regime................................................................................... 23
      3. Growing National and Individual Savings through Gambling...................... 26
   2. Comparative Good Practice in Gambling Regulatory Frameworks.................... 27
      1. Legal Status of Gambling...................................................................................... 27
      2. Legal Status and Regulation of Gambling.......................................................... 27
      3. Forms of Gambling................................................................................................. 28
      4. Responsible Gambling Regimes............................................................................ 28
   3. Rationale for a New, Progressive Gambling Policy Framework.......................... 28
4. A POLICY FRAMEWORK FOR TRANSFORMING THE GAMBLING SECTOR INTO A FORCE FOR SOCIAL PROGRESS..................................................................................... 30
   1. Introduction..................................................................................................................... 30
   2. Constitutional Basis and Scope of the Gambling Policy....................................... 30
      1. Constitutional Basis for the Gambling Policy 2023......................................... 30
      2. Scope of the Gambling Policy 2023...................................................................... 31
      3. The Guiding Principles........................................................................................... 31
   3. The Policy Considerations and Strategic Objectives.............................................. 34
   4. Conclusions..................................................................................................................... 35
5. BUILDING A FORCE FOR SOCIAL PROGRESS: TRANSFORMING STRATEGIES FOR THE GAMBLING SECTOR................................................................................................. 36
   1. Introduction..................................................................................................................... 36
   2. Roles for the National Government and County Governments........................... 38
      1. Policy Goal.............................................................................................................. 38
      2. Background.............................................................................................................. 38
      3. Policy Statement..................................................................................................... 39
      4. The Strategies........................................................................................................... 39
   3. Clarity in Definition of Gambling.............................................................................. 39
      1. Policy Goal.............................................................................................................. 39
      2. Background.............................................................................................................. 39
      3. Policy Statement..................................................................................................... 40
      4. The Strategies........................................................................................................... 40
   4. Policy, Legal, Institutional and Regulatory Framework......................................... 40
      1. Policy Goal.............................................................................................................. 40
      2. Background.............................................................................................................. 40
      3. Policy Statement..................................................................................................... 43
      4. The Strategies........................................................................................................... 44
   5. Revitalising Other Forms of Gambling in Kenya................................................... 55
      1. Policy Goal.............................................................................................................. 55
      2. Background.............................................................................................................. 55
      3. Policy Statement..................................................................................................... 56
      4. The Strategies........................................................................................................... 56
   6. Conclusion....................................................................................................................... 57
6. DELIVERY FRAMEWORK.................................................................................................. 58
   1. Introduction..................................................................................................................... 58
   2. Consistent, Capable and Inclusive Leadership........................................................ 58
   3. Robust Governance of the Gambling Sector and Its Institutions........................ 61
   4. Capacity and Capability Development Framework................................................ 61
   5. A Robust Change Management Strategy.................................................................. 61
   6. Risk Management Strategy.......................................................................................... 62
   7. Monitoring, Evaluation and Review of the Policy.................................................. 64
   8. The Implementation Plan............................................................................................. 64
7. CONCLUSION....................................................................................................................... 68

8. 9      ANNEXES................................................................................................................................ 80 Annex 1:        Comparative Good Practice Analysis of Gambling Regulatory Frameworks......................................................................................................... 80 Annex 2:        Turning Aces into Assets: The Case for Gambling Reform in Ontario.. 86 Annex 3:        Gazette Notice No. 8753 of 8 September 2017 – Delineation of Gambling Functions between the National Government and the County Governments....................................................................................................... 87 Annex 4:        Clarification of Good Causes Under this Policy Framework.................... 88

   REFERENCES......................................................................................................................... 71

LIST OF TABLES

Table 1:      A Brief Timeline of the Evolution of Gambling Globally.................................. 1

Table 2:      Public Policy Models of Gambling, 2023................................................................ 2

Table 3:      Evolution of Kenya's Gambling Policies and Laws, 1948 to 2023...................... 5

Table 4:      Forms of Gambling in Kenya.................................................................................... 7

Table 5:      Proportion of the Kenyan adult population engaged in betting...................... 10

Table 6:      Characterising The Kenyan Gambling Industry................................................. 12

Table 7:      Number of Applications and Number of Licenses Issued................................ 13

Table 8:      Comparing Kenyan Gambling Industry Performance 2018/19 to 2021/22...... 14

Table 9:      Comparison of Gambling Operators Turnover, 2019/20 to 2021/2022............. 15

Table 10:        Current Taxation Framework for Kenya's Gambling Industry, March 2023 .

...................................................................................................................................   17

Table 11:        Summary of Gaming Devices and Number of Employees in the Country 18

Table 12:        Comparing Gambling Taxation Regimes in Different Jurisdictions........... 25

Table 13:        Roles of Support Agencies in Delivering a Transformed Gambling Sector .

...................................................................................................................................   59

Table 14:        Risk Management Matrix for the Transformed Gambling Sector Policy... 62

Table 15:        Draft Implementation Matrix for the Transformed Gambling Sector Policy

...................................................................................................................................   65

Table 16:        The Transformed Gambling Sector in Kenya.................................................. 68

LIST OF CHARTS

Chart 1:      Percentage of Kenyan Population aged 18+ engaged in Gambling, 2022....... 10

Chart 2:      Comparison of Gambling Operations (Turnover in KShs.).............................. 14

Chart 3:      A Framework for Responsible Provision and Consumption of Gambling.... 22

Chart 4:      The Nine Pillars for Gambling Sector Transformation in Kenya.................... 33

Chart 5:      A Framework for Regulating the Transformed Gambling Sector in Kenya.. 37

Chart 6:      Proposed Institutional Structure for Managing the Transformed Gambling Sector in Kenya....................................................................................................................... 42

Chart 7:      Estimated National Lottery Turnover (in KShs. Billion).................................... 69

LIST OF DEFINITIONS

Gambling                      means the playing of a game of chance for prize-winning and includes lottery and betting.

LIST OF ACRONYMS

AML                               Anti-Money Laundering

BC                                  Before Christ

BCLB                             Betting Control and Licensing Board

xi

1. PREAMBLE

Gambling has existed for as long as man has abided on earth, as shown in Table 1. According to McMillen (2006), Chinese gambling has been traceable for over 4,000 years. Also, excavations at Ur (2000 BC), Crete (1800 BC), Egypt (1600 BC), and India (1000 BC) have unearthed dice and gaming boards. Betting on horse racing was common among the Hittites (4000 BC). Further, archaeological records show that for over 2,000 years, many ancient Asian and Arabian societies tossed tokens or coins to guide decisions. To maintain discipline King Richard I of England forbade gambling among soldiers below the rank of knight. Indeed, many communities incorporated gambling into their activities, where luck and games of chance were necessary before the onset of many cultural events.

Table 1:        A Brief Timeline of the Evolution of Gambling Globally¹

1                      Extracted from https://localhistories.org/history-of-gambling-how-people-started-gambling

Historically, gambling has been frowned upon as an activity encouraging certain immoralities (Bitanihirwe, 2022) and has previously been prohibited by law. These immoralities include the potential for addiction, debt, bankruptcy, and even suicide. The focus on gambling as a moral issue has increasingly shifted as individuals have asserted their rights, and society has perceived gambling as a form of entertainment. Indeed, Sallaz (2006) and McMillen (2006) both observe that while gambling existed and was suppressed mainly for moral reasons, the past six decades have also seen global commercialisation of gambling driven by a shift from gambling prohibition to legalisation and divergence regarding how new gambling industries is structured and regulated.

Table 2:        Public Policy Models of Gambling, 2023

Source:           Adapted from Kingma, 2002

Globally, Government attempts at outlawing gambling have not been very successful. Consequently, the legalisation of gambling in jurisdictions reflects their peculiar circumstances. The response has severely limited gambling to lessen its actual and alleged detrimental impacts. Three distinct public policy frameworks (perspectives) of the sector are described in Table 2 as having guided actions to control and harness the gaming sector or industry.

The notion that gambling is a vice that ought to be avoided has given way to the realisation that it is an activity with risks that should be regulated. These perspectives have shaped how jurisdictions have dealt with the promise or challenge of gambling. The tendency has been to move away from severe and forceful policing toward maximising social benefits with due regard to scientific research and healthcare imperatives. It is evident that efforts to abolish gambling, even in the most restrictive nations, have largely failed. A good example is in China, where gambling has been prohibited but they operate the world's largest sports and welfare lotteries.

Despite this, commercialised gambling has become widespread due to shifting demographics, societal norms and values, and technical advancements. Proactive governments have noticed this and capitalised on the possibility of raising significant sums of money to fund the provision of public services. How to leverage gambling to ensure that it promotes the good well-being of society is, therefore, a crucial policy concern.

2. KENYA'S   GAMBLING   POLICY   CONTEXT   AND CHALLENGE
   1. History of Gambling in Kenya

In a study on traditional gambling in sub-Saharan Africa, Bitanihirwe et al. (2022) found that these practices predate the current, digitally mediated intensification of commercial gambling in the region. Gambling in Kenya and Africa has developed alongside larger processes that replaced native cultural forms with those of the colonisers. From traditional games like Abbia, Mancala, and Bao to newer games introduced through the slave trade and colonialism, such as card games and horse racing, gambling has taken root.

As seen in Table 3, gambling has a long and complicated history in Kenya, dating back to the pre-colonial era, when many tribes played traditional games of chance. In the colonial era the British immigrants also introduced new gambling types, such as casino games and horse racing. It did not take long before the locals became interested in racing-related gambling.

Kenya matched the mould in terms of the growth of the gambling industry and the way that society and the Government responded to it. Kenya did not permit gambling until 1952. At the Committee on Betting, Gambling, and Lotteries hearings of 1952, the Christian Council of Kenya stated that while gambling was abhorrent and went against the protestant work ethic, making it illegal would force it underground with all the consequences that would follow. They thus argued that decriminalising gambling while strictly regulating it, including collecting taxes and applying harsh penalties, would be a more practical action. This realisation appears to have guided additional formal activities in this sector.

As a result, gambling in Kenya remained relatively small-scale, even during the 1970s and 1980s, with the most activity taking place at racetracks and in licensed betting businesses. However, the introduction of the internet and mobile phones in the 1990s created new opportunities for gambling, and several foreign online betting companies began to focus on Kenyan customers.

Table 3:          Evolution of Kenya's Gambling Policies and Laws, 1948 to 2023

Source:           Mbasi, 2013

Today, Kenya has a substantial gambling industry, with both legal and illegal gambling is taking place throughout the country. Concerns are increasingly being voiced on gambling's social and economic effects, particularly on vulnerable groups like children and low-income earners. The Kenyan Government has responded by imposing a number of controls and limitations on gambling, including higher taxes and stricter advertising regulations. Despite these measures, Kenya's gambling industry continues to grow as new players and games are continuously entering the market.

1. 2. Gambling Policies and Legislation in Kenya

Kenya was at the forefront of African countries that sought to regulate the gambling industry. As shown in Table 3, and according to Mbasi (2013), in 1952, the Jockey Club made recommendations to the Colonial Government for the establishment of a Betting Control Board, which they actualised through the establishment of the Committee on Betting, Gambling, and Lotteries. This Committee was to look into the existing law and practice of betting, gambling, and lotteries. The existing law was the Gambling Ordinance, Chapter 26 Laws of Kenya, whose intention was to suppress common gaming houses and gambling in public places. It prohibited keeping, managing, using, or permitting other persons to use any building, enclosure, vessel, or place either as an owner or occupier for purposes of gaming.

The implementation of this Committee's recommendations took more than 11 years. The Government of Kenya passed the Betting, Lotteries, and Gaming Act, Cap. 131, Laws of Kenya (BLGA) in 1966, creating a framework for regulating gambling in the country. It repealed the Betting Tax Act of 1963, regulation 162(f) of the Local Government Regulations of 1963, sections 176 to 180, and 182(c) of the Penal Code, Cap. 63, the Pools Act, Cap. 478, and the Gambling Act, Cap. 26 (1948). Despite the transformation that has swept the gambling industry since 1966, the law has not kept pace with these changes.

The BLGA permitted the licensing and control of bookmakers and other gambling businesses, as well as the formation of public lotteries. The BLGA has undergone a number of revisions, with a notable update occurring in 1991. The Second Schedule was added in 2005, and some restrictions were modified. Other changes concentrated on taxing the gaming industry. An attempt was made in 2019 to establish a new gaming policy and law. This attempt at sector consolidation was unsuccessful. The BLGA considers the activities shown in Table 4 below to fall under the category of betting, gaming, and lotteries.

Source:           Betting, Lotteries, and Gaming Act, Cap. 131 of the Laws of Kenya Other laws affecting the operations of the gambling sector in Kenya include:

1. 1. 1. The Constitution of Kenya, 2010;
      2. The Bribery Act No. 47 of 2016;
      3. The Computer Misuse and Cybercrimes Act No. 5 of 2018;
      4. The Consumer Protection Act No. 46 of 2012;
      5. The Kenya Information Communication Act No, 2 of 1988;
      6. The Data Protection Act No. 4 of 2019;
      7. The Excise Duty Act No. 23 of 2015;
      8. The Value Added Tax Act No. 35 of 2013;
      9. The Kenya Citizenship and Immigration Act No. 12 of 2011;
      10. The Income Tax Act, Chapter 470 of the Laws of Kenya;
      11. The Standards Act, Chapter 496 of the Laws of Kenya;
      12. The Trade Marks Act, Chapter 506 of the Laws of Kenya
      13. The Proceeds of Crime and Anti-Money Laundering Act;
      14. The Unclaimed Financial Assets Act No. 40 of 2011;
      15. The Law of Contract Act, Chapter 23 of the Laws of Kenya
      16. The Proceeds of Crime and Anti-Money Laundering Regulations;
      17. The Kenya Citizenship and Immigration Regulations, 2012;
      18. The Trade Marks Rules;
      19. The Unclaimed Financial Assets Regulations;
      20. The    Data    Protection    (Complaints    Handling    Procedure   and    Enforcement) Regulations, 2021;
      21. The Data Protection (General) Regulations, 2021;
      22. The Data Protection (Regulation of Data Controllers and Data Processors) Regulations, 2021;
      23. The Income Tax (Transfer Pricing) Rules, 2006; and
      24. Delineation of Functions Related to Betting, Casinos, and Other Forms of Gambling, Gazette Notice No. 8753 of 8 September 2017.

These laws and the attendant regulations create a fairly robust regulatory framework for the gambling industry in Kenya, within which duties and obligations are variously distributed between the actors in the gambling industry value chain. The 47 County Governments, the National Government, the Operators (Investors), as well as their distributors and suppliers, which include end users, who make up this value chain (consumers of the goods and services provided by the gambling businesses, including players). Along with the aforementioned, Court jurisprudence regarding gambling and contract law is of utmost importance. For instance, in Common Law, bets on games of chance were not considered legally binding contracts; therefore, neither the loser nor a stakeholder could be sued to recover winnings.

In contrast to the national Government, which focuses on licensing and regulation to allow activities throughout the entire nation, county governments issue permits or license to gambling company to operate within their jurisdiction. The county governments provide a variety of permissions, permits, or licences depending on the gambling product to be offered, the size of the premises used for the operations, the number of employees, the location of the premises, and any products delivered or sold other than those directly regulated by the BCLB. However, emerging trends suggest a lack of uniformity in the manner that county governments are issuing gaming licenses.

An examination of Kenya’s gambling laws and rules reveals several concerns. Firstly, the industry is not organized in a way that allows it to be used for the greatest good while causing the least harm, despite the elaborate legal framework in place. The public sector's impulsive responses to current and emergent problems, in the face of well-established industry entities with interests to defend, serve as an example of this.

Secondly, despite the presence of regulatory bodies, insufficient enforcement of laws has encouraged the growth of unlicensed and illicit gambling businesses. Indeed, the loss of life of a 17-year-old² after winning KShs. 200,000 from a sports betting firm, stark evidence of some operators' ineffective age verification practices, reflecting the rise in minors gambling. Thirdly, even though the regulatory framework includes some provisions for consumer protection, such as obligatory warnings about the risks of addiction in gambling

2                      https://nation.africa/kenya/counties/shock-as-form-two-student-murdered-winning-sh200-000-lottery-4159122 accessed on 26 March 2023

advertisements, they seem to be insufficient in protecting vulnerable consumers, such as those who have gambling addictions or low incomes.

Fourthly the gambling sector globally is a high-margin industry. Consequently, there are, two schools of thought in relation to the sectoral taxation regime. Operators feel that the taxation scheme is exorbitant and difficult to enforce. While detractors contend that the industry's contribution is insufficient to address the harms it causes. Because prohibition of gambling is a costly affair, there is a clear need to reconcile the two differing positions.

Fifthly, there is confusion on the best way to handle new and developing kinds of gambling as well as online gambling. In fact, the current regulatory system places the onus of establishing that a certain activity qualifies as gambling on the regulator. This places them at a disadvantage and creates an opportunity for unscrupulous actors to extract rents without any regulation. Additionally, it allows for unchecked movement of resources from the economy to other parties.

Finally, there are inadequate mechanisms for complaints and conflict resolution. Consumers, operators, regulators, and the general public are concerned with the existing systems since they are often slow and ineffective.

1. 3. Who Gambles in Kenya?

Table 5 below shows some of the results of the Kenyan FinAccess Household Survey of 2019, which describes the adult population who bet. Males living in metropolitan areas, who are young (18-36 years old), and educated are more likely to bet. It is estimated that from 2019 to 2021, the percentage of adults who gambled increased from 1.9% to 13.9%. It is quite possible that this understates the scope of gambling in Kenya because it did not collect data on minor gamblers. Central Bank of Kenya et al., (2019) reported that a large portion of Kenyans consider gambling to be a legal source of income generation in a country with a high unemployment rate. Reconciling this perception with the concern that widespread gambling would create a nation of layabouts, looking to make quick money is a key concern for public policy.

Table 5:          Proportion of the Kenyan adult population engaged in betting

Source:           FinAccess Survey 2021

Furthermore, according to FinAccess 2021, 11.2% of adults in Kenya see betting as a reliable source of income (a decline from 22.7 percent in 2019). The percentage of men and young people (18-35 years old) who think it's a decent source of income was higher, at 14% and 15%, respectively. Chart 1 illustrates the extent of gambling in the various counties, showing the population aged 18 and above that have engaged in gambling in the past year.

Chart 1:        Percentage of Kenyan Population aged 18+ engaged in Gambling, 2022

Source:           Kenya National Bureau of Statistics, 2022

Mobile money is a crucial gaming distribution channel. In total, 2.6 percent of mobile money account owners admitted to placing bets using their accounts. According to the 2021 FinAccess poll, of those who admitted to betting, 16 percent did so daily, 41 percent weekly, 8 percent monthly, and 22 percent infrequently. There was a considerable drop in betting frequency when compared to survey data from 2019, possibly a reflection of the impact of government regulatory interventions in 2018.

Similarly gambling activities have reportedly become "anytime, anyplace" due to increased access to mobile devices (smartphones and tablets). A GeoPoll survey indicates that roughly 57 percent of Kenya's adult population (those over 16) have placed a bet in the past, with a significantly high frequency among smartphone owners. According to Kisambe (2017), Kenya has the highest percentage of young gamblers in Sub-Saharan Africa (76%), and 96% of these young gamblers use mobile devices.

According to the 2019 GeoPoll Survey, many gamblers come from low-income families. Of those from low-income backgrounds, 40% are unemployed and 29% are still in school. Table 6 provides a tour de force of Kenya's gambling industry. It supports research from numerous studies that looked at the potential of the gambling industry as well as the dangers that come with it, especially for young people. There seems to be a link between the surge in gambling and the desire for a better future in Kenya, where unemployment is a significant socio-economic and public policy challenge.

Table 6:          Characterising the Kenyan Gambling Industry³

3                        University of Nairobi and University of Massachusetts Amherst. (2017). Adolescent gambling behavior in Nairobi, Kenya. Nairobi, Kenya: University of Nairobi.

Ongori H., & Gichuki J. (2020). Gambling behaviour and its determinants in Kenya: Insights from a 2018 national survey.

BMC Public Health, 20, 1-9. https://doi.org/10.1186/s12889-020-08545-8

Kibwage, I. O., Ndetei, D. M., & Karim, A. M. (2019). Prevalence and factors associated with at-risk gambling among university students in Kenya. Journal of Gambling Studies, 35(3), 1035-1048.

Onyango, M. A., Lule, G. N., & Mwebi, A. (2019). Problem gambling among the Kenyan adult population: a psychometric evaluation of the PGSI. Journal of Gambling Studies, 35(4), 1395-1414.

Kiiru, J. N., Karimi, W. N., & Odhiambo, J. O. (2019). Risk factors for problem gambling among young people in Nairobi, Kenya. Journal of Gambling Studies, 35(3), 959-975.

Gathogo, M. J., Njuguna, H. N., & Njoroge, P. M. (2020). Prevalence and correlates of gambling disorder among university students in Kenya: a cross-sectional study. Journal of Gambling Studies, 36(1), 243-258.

4                      PriceWaterhouseCoopers.  (2019).  Gambling  Outlook  2019-2023:  An    African  perspective.  Retrieved  from https://www.pwc.co.za/en/assets/pdf/gambling-outlook-2019-2023-an-african-perspective.pdf

5                      Mburu, J. M., Ondigo, B. N., Odhiambo, R., & Othieno, C. J. (2018). Prevalence and correlates of problem gambling in a representative sample of Kenyan college students. BMC Psychiatry, 18(1), 242. doi: 10.1186/s12888-018-1812-y.

6                      Wagenaar, A. C., Volberg, R., & Haroun, M. (2017). Gambling and problem gambling in Kenya: Results of a national survey. Journal of Gambling Studies, 33(3), 737-756. doi: 10.1007/s10899-017-9689-y

1. 4. Size and Structure of the Kenyan Gambling Market
      1. Size of the Kenyan Gambling Market

The Kenyan market is reportedly the third largest gambling market in Africa. A report by PricewaterhouseCoopers (PwC) valued the Kenyan gambling market at KShs. 202 billion in 2019. From 2020 to 2025, the market is anticipated to expand at a compound annual growth rate (CAGR) of 7.5 percent, propelled by rising popularity of on-line and mobile gaming.

1. 1. 2. Structure and Performance of the Gambling Sector in Kenya

Structure of Kenya's Gambling Market

The industry comprises three key sectors, namely bookmakers (sports betting), public lotteries, and public gaming- casinos. According to section 16 of the BLGA, bookmaking is a type of gambling in which players compete by picking the results of sporting events like football or horse racing., where each winner is compensated based on what they have wagered. Public lotteries are permitted under section 36 to solicit donations from the general public only for charitable causes. Section 46 of the BLGA defines public gaming as including casinos and activities carried therein such as slot machines and table games.

Table 7 shows a summary of the applications and licenses issued in the three sectors in the last three years. It demonstrates that although there are more bookmakers, there are less licensed bookies who are based on applications. This shows that the bookmaking industry has increased its interest from investors. Contrariwise, the number of licensed operators in the public lottery and public gaming segments have reduced.

Table 7:        Number of Applications and Number of Licenses Issued

Source:           Computed from Betting Control and Licensing Board data, 2023

Chart 2:        Comparison of Gambling Operations (Turnover in KShs.)

Source:           Constructed from BCLB Data, 2023

Performance of Kenya’s Gambling Market

Chart 2 above illustrates a comparison of turnover in the various gambling industry operations. Each segment's data is based on gross gaming revenue (GGR), a generally accepted indicator of sector productivity is total turnover less pay-outs (winnings).

As shown in Chart 2, The largest market segment is bookmaking (mostly sports betting), which is followed by public gaming, public lotteries, and prize competitions, which are a distant third and fourth respectively No data is available on gross revenues from public gaming, and prize competitions. It is therefore challenging to compare and interrogate the performance of these different segments of the gambling sector comprehensively.

Table 8:        Comparing Kenyan Gambling Industry Performance 2018/19 to 2021/22

Source:           BCLB, 2023

Table 8 provides an analysis of gross revenues, pay-outs and GGR by bookmakers and public lotteries. It confirms the dominating performance of bookmakers in Kenya's gambling market.

As can be seen in Table 8, bookies revenues fell from KShs 299 billion in 2018/19 to KShs 71 billion in 2020/21 and then to KShs 46 billion in 2022, while total pay-outs fell from KShs 269 billion in 2018/19 to KShs 55 billion in 2020/21 and further to KShs 43 billion in 2021/22. The Gross Gambling Revenue (GGR) was approximately KShs. 16 billion at the end of the last fiscal year, from KShs. 30 billion in 2019 and KShs. 15 billion in 2021. 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. this tendency.

As demonstrated in Table 9, productivity in the last three years of public gambling (casinos) decreased from KShs 8.4 billion in 2019 to KShs 3.8 billion in 2020, and then further to KShs

1.7 billion in 2021. This may be partially attributed to the Covid-19 epidemic-related business closures (casinos). The only casinos that remained were the online ones. This explains the significant increase in public gaming turnover to KShs 6.4 billion in 2021/22 as the economy started to reopen and online casinos gained popularity. Online casinos generated KShs 3.8 billion, compared to the physical casinos' yield of KShs 2.5 billion.

Table 9:        Comparison of Gambling Operators Turnover, 2019/20 to 2021/2022

Source:           BCLB, 2023

Public lotteries reported a decline in turnover during this period, partly explained by the strict enforcement measures by the BCLB while some licensed operators closing business as shown at Table 9. The impacts of COVID-19 also caused the betting market to contract. From KShs 1.5 billion in sales in 2019 to KShs 0.95 billion in 2020, and then even less in 2022, KShs

0.530 billion. With respect to public lotteries, the GGR went from KShs 867 million in 2019 to KShs 294 million in 2022. The public lottery's charitable intent has never been fully embraced in Kenya.

1. 5. Gambling Sector Taxation in Kenya

The Government has made many attempts at increasing the economic rent it gets from the gambling sector. This history can be elucidated as follows:

1. 1. 1. The Finance Act 2012: made its first attempt to tax gambling and wagering gains in the middle of 2012 with the Finance Act of 2012, where winnings were subject to 20% withholding tax.
      2. The Finance Act 2012 revised: deleted the said amendments in January 2013 before they could be implemented.
      3. The Finance Act 2013: reintroduced the 20% winner's withholding tax as a final tax effective January 1^st, 2014.
      4. In 2013: after the withholding tax on gaming and betting was reinstated, the Association of Gaming Operators petitioned the High Court, arguing that the new Income Tax Act revisions made by the Finance Act of 2013 were unlawful because they were passed without consulting the public. The Association further claimed that it would be impossible to enforce the tax. The Kenya Revenue Authority's position was upheld by the courts. All gaming and betting businesses were thus obligated to retain 20% portion of winnings and remit to the KRA. Applicability of this tax to net or gross winnings remains unclear.
      5. In 2015: the Finance Act of 2015's amendments to the Income Tax Act, imposed a withholding tax on the gross winnings that bookmakers pay gamblers. In addition, the withholding tax was decreased from 20% to 7.5%. The new rule became effective on 1 January 2016.
      6. The Finance Act of 2016: to better simplify industry taxation and promote compliance, the Government transferred the sector's taxes from the Income Tax Act Rules to the Betting, Lotteries, and Gaming Act's jurisdiction. As of January 1^st, 2017, Kenya now taxes bookmakers rather than gamblers.
      7. The Finance Act of 2016: established a 7.5 percent monthly betting tax on the gaming income of bookmakers. The gross turnover of the bookmakers less the winnings paid out to gamblers is used to determine gaming revenue.

A monthly tax of 5% was also levied on lotteries revenue. Casinos were charged a monthly gaming tax of 12% of their gaming earnings. Prize giveaways and promotions were subject to a monthly prize giveaway tax of 15% of gross income.

Operators in Kenya's gambling industry currently pay the taxes shown in Table 10. The Kenya Revenue Authority defines gambling (gaming) revenue as the total turnover less the sum paid out to consumers as winnings⁷.

By default, Kenya seems to have adopted a variable fiscal regime for the gambling sector i. That is, segments in the gambling sector are not taxed similarly. This singular focus on gaining tax revenues, does not seem to consider the investment and operation profiles of the different segments. Coupled with implementation challenges, this offers insights into the country's view of gambling as a sector with little positive contribution to offer the country. The main public policy challenge is whether this arrangement maximizes the economic gain the nation receives, maximizes the opportunity for Kenyans to have successful economic lives by luring in investment and generating quality jobs, and simultaneously reducing the sector's negative effects.

Table 10:      Current Taxation Framework for Kenya's Gambling Industry, March 2023

Source:           https://kra.go.ke/helping-tax-payers/faqs/betting,-gaming-and-lottery-tax

7                      https://kra.go.ke/helping-tax-payers/faqs/betting,-gaming-and-lottery-tax on 11 March 2023

1. 6. Contribution of Gambling to the Kenyan Economy

According to reports, gambling generates more than KShs 200 billion in revenue each year in Kenya (BCLB, 2018). Gambling of all kinds, including sports betting, casinos, lotteries, and online gaming, is popular in Kenya. The contribution of the gambling sector to the economy is assessed by reviewing its contribution to tax revenue generation, job creation and corporate social responsibility.

1. 1. 1. Contribution to Tax Revenue Generation

There appears to be a lack of information regarding numerous facets of the gambling industry’s operations, just like with all its other facets. Emergence of online gambling, which has undoubtedly grown but it also offers little few information on tax revenue. in this area, makes matters worse. For instance, the Kenya Revenue Authority reportedly increased its month-on-month revenue collection from the industry by merely interconnecting its systems with those of operators in the gambling industry. This yielded withholding tax on winnings from betting of KShs. 1.008 billion in December 2022 up from KShs. 465 million in December 2021, an increase of 116.9%. There is clearly latent potential from the sector to generate increased taxes based on current taxation rates.

1. 1. 2. Contribution to Employment Creation

The operators as well as their agents, are the main sources of employment in the sector. These direct and indirect employment opportunities have a high multiplier effect given that other related businesses have come up due to gambling operations. According to the BCLB, while data on employees in Casinos is readily available, there are gaps in data on the direct employees of sports betting firms and lotteries.

Table 11:      Summary of Gaming Devices and Number of Employees in the Country

Source:           BCLB, 2023

Data from a BCLB survey on the number of gaming machines and employees in Kenyan casinos, broken down by County, are shown in Table 11. This study revealed that the BCLB had approved 1,780 gaming gadgets for use in the 44 casinos. A total of 2,273 people — 2,234 Kenyans and 39 people from other countries — had been directly hired by them. After layoffs occasioned by business shutdowns induced by COVID 19, the numbers of employees declined.

1. 1. 3. Social Impact / Corporate Social Responsibility

The industry operators are all expected to engage in community empowerment initiatives that create social impact. Section 36 of the BLGA provides for public lotteries contributions to charitable purposes. It states that as a licensing condition, the BCLB may require that a specified proportion of between 25% – 45% of the proceeds of a public lottery be applied to the object for which the lottery is promoted. A reading of this law indicates that apart from public lotteries, mechanisms for ensuring that good causes are funded are not well- structured nor compulsory and are largely left to the discretion of an operator. Further, other segments of the gambling sector appear to be excluded. Yet, all the evidence suggests these other sectors are performing better than public lotteries. This does not therefore foster a good, transformative gambling sector, serving wider interests of the nation.

The good cause initiatives identified range from sponsorship of community programs like provision of desks to schools, hospital equipment, and support to sports clubs. Lotteries like Lotto Kenya have been involved in distribution of food stuffs to the vulnerable in the slum areas during the Covid-19 pandemic. There have also been resilience projects like drilling boreholes. In addition, some operators continue to sponsor local football clubs, and national teams participating in international outings like in Olympics. The BCLB has also used unclaimed prizes to make donations to children's homes and other vulnerable groups. The key policy issue is what needs to be done to improve the current arrangement so that funding for good causes is no longer simply voluntary or at the discretion of the operator, but that it is a key component of the licensing arrangements for the operators.

Majority of funding for the Sports, Arts, and Social Development Fund (SASDEF), also referred to as the Sports Fund, comes from gambling taxes. The Sports Fund is essential to maximizing the sporting potential and greatness of our nation. The main policy concern with regard to SASDEF is how we can make sure that money from gambling taxes is coordinated with any additional financing for good causes to prevent funding from being duplicated at the expense of other critical interventions.

1. 7. Kenya's Gambling Policy Challenge

The expanding gambling market in Africa has increased tax receipts and employment prospects. As a result, everyone's health and wellbeing—including those of individuals, families, communities, and society—have suffered. Due to notions or beliefs about the potential of gambling as a respectable, stable source of income and the high rates of poverty and un(der)employment, particularly among youth, people in this vulnerable segment of society in Africa are increasingly turning to gambling. It has been demonstrated that such biased gambling beliefs increase both the likelihood of developing gambling-related problems as well as the frequency of gambling. This is a key regulatory concern in the effort to promote responsible gambling.

Further, the risk of seeking to strictly control gambling is that it encourages illegal gambling and gambling tourism. However, when governments become involved, either by taxing gambling, winnings or by regulating gambling activities, promoters and governments develop relationships that are advantageous to all parties. This has been demonstrated in places such as the Principality of Monaco, Singapore, the United States, the United Arab Emirates, Egypt and China, where governments are earning large rents from the sector.

3. LESSONS IN TRANSFORMING THE GAMBLING SECTOR INTO A POSITIVE FORCE FOR SOCIAL PROGRESS

The evident knowledge that there are significant economic benefits and that it would be too expensive to forbid gambling resulted in its legalisation and commercialisation. The general stance of a jurisdiction determines whether it gains or losses from gambling.

1. 1. Policy, Legal and Institutional Regimes

According to Meiers (2010), two concepts have served as the foundation for the legal framework controlling the commercial gambling sector in the United Kingdom, which includes bookmaking, bingo, casino gaming, lotteries, including the National Lottery, and pool competitions. These views include the following: (1) gambling is an endemic activity that is unregulated and has negative social effects; and (2) the Government has no obligation to do anything other than facilitate people's participation in gambling. It is important to remember that every one of the several commercial gambling industry areas will impose extra regulatory limitations. Given the self-generated risks inherent in the industry, it is crucial to carefully balance social and economic regulation of the gambling sector as it grows into a substantial economic sector.

1. 1. 1. Responsible Gambling Framework

It is critical to properly balance social and economic regulation of the gambling business as it develops into a significant economic industry, given the self-generated hazards inherent in the sector. In this regard, the World Lottery Association (WLA) has highlighted the following principles as being crucial:

1. 1. 1. 1. While protecting customer interests and vulnerable populations and upholding public order within their various realms of influence, they must employ reasonable and fair measures to accomplish their aims.

1. 1. 1. 2. Employ techniques and protocols that combine governmental requirements, operator self-regulation, and personal accountability.

1. 1. 1. 3. Complete comprehension of pertinent data and an analysis of supporting research to inform their decisions regarding responsible gaming matters.

1. 1. 1. 4. Collaborate with regulators, non-governmental groups, governments, academics, public health specialists, and the public, to exchange knowledge, conduct research, and spread the message of responsible gaming as widely as possible.

1. 1. 1. 5. Take reasonable measures to guarantee that their agents uphold only ethical and responsible gaming in all facets of their operations, including creating, promoting, and marketing their goods and services.

1. 1. 1. 6. Make sure that acceptable operator self-regulation applies to marketing of gambling activities and products, and encouraging responsible gaming habits and informed choices by providing individuals with correct information about gaming and the hazards it entails.

1. 1. 1. 7. Make sincere attempts to monitor, evaluate, and, if necessary, alter the practices and activities related to responsible gambling and publishing their findings.

Chart 3:          A Framework for Responsible Provision and Consumption of Gambling

• • • • • RESPONSIBLE PROVISION OF GAMBLING (The State, Operators) Regulation and Legislation

          Educating individuals about the nature of gambling

• • • • • Encouraging players to wager within affordable limits; and
        • Providing sufficient information about a game to allow players to exercise informed decisions

RESPONSIBLE CONSUMPTION OF GAMBLING

• • • • • Gambling within an individual’s affordable limits of time, money and other resources
        • Keeping gambling in balance with other activities and priorities
        • Exercising informed choice over gambling
        • Staying in control of gambling
        • Gambling only for pleasure, and entertainment.
        • Absence or low risk of gambling- related harm

RESPONSIBLE GAMBLING OUTCOMES

• • • • • Reduced severity of gambling harm
        • Reduced rates of problem gambling
        • Win-win outcomes for society, players and investors

Source:           Author's construct

These guidelines, which are based on the Reno Model, a scientific framework for responsible gambling, serve as a unifying manual for the gaming industry, governments, regulators, operators, community groups, and consumers. According to the Victorian Responsible Gambling Foundation (2016), "responsible gambling" refers to gambling practices and

surroundings that reflect conscious decisions made within a set of predetermined boundaries.

An examination of responsible gambling practices in Singapore, China, United Kingdom, Australia, South Africa, Nigeria, and Canada, generally documented in Chart 3, suggests that these interventions incorporate (a) robust management structures; (b) adequate consumer safeguards; (c) enforcing responsible gambling principles as component of responsible gaming; (d) long term consumer education and public awareness programs built around carefully selected messaging initiatives; (e) solid and strategic government leadership in influencing stakeholders; (f) strategic harm minimisation activities; (g) evidence based interventions; (h) strong efforts to limit gambling advertising, particular that are targeted at vulnerable populations; (i) venue and customer exclusion systems; (j) proactive services for treatment and counselling; and (k) industry codes of conduct or practice. These interventions combine prevention and treatment, with clear monitoring and intervention arrangements.

1. 1. 2. Gambling Taxation Regime

According to Olweny (2022), the benefits of gambling to the economy include (a) the emergence of numerous, well-paying employment possibilities; (b) increased tax revenues from the high profit margins; (c) the attraction of significant foreign investments; (d) its resilience against adverse events affecting the economy; and (e) its interconnectivity with other economic sectors. The money spent on gambling often has a favourable domino effect on other industries. Problem gambling, on the other hand, frequently leads to reduced productivity at work, loss of employment, debt and risk of bankruptcy, as well as an increase in the cost of credit across the economy, a greater reliance on unemployment benefits, crime (attraction of illegal actors), the dissolution of families, and mental illnesses like depression and anxiety, which can lead to suicide.

Because of this, one of the ways the sector benefits the economy is taxing key points along the gambling value chain. Many nations throughout the world have introduced different taxation schemes for the gaming business. According to Christiansen (2005), the gaming sector is one of a small number of industries that is subject to tax regulations that are distinct from those that are in place for the rest of the economy. Casinos, lotteries, horse racing, online gambling, and other forms of gambling are almost all subject to higher taxes than typical enterprises.

As illustrated in Table 12, different nations have distinct taxation regimes that reflect their political systems and the public policy choices they have made regarding how to use the sector for the development of their respective nations' economies. While some nations impose separate taxes based on the sorts of gambling they permit, such as betting, lotteries, casinos, and prize competitions, others tax bookmakers differently from other trade businesses. Other countries tax gambling winnings at the same rate as other regular income. However, some states do not tax gambling winnings, while others withhold a final tax from the payments. For instance, wins from gambling are completely taxed in the US, and winners must declare their earnings on their tax return and gambling losses are deductible, but only if they can be tracked down and supported. Increasingly, akin to the polluter pays principle, taxation of the gambling sector must account for the harms caused by the sector, even as policy facilitates reasonable returns on investment for investors.

What is observable in Kenya, Ghana, and South Africa is that there appears to be no taxes on online gambling, despite this being the largest area of gambling activity and growth. It is thus imperative that telecommunications companies are required to provide data to facilitate equitable taxation of this segment. The presence of foreign suppliers may have a negative impact on the domestic market if they give those suppliers an unfair advantage, according to Kahlil (nd), so tax policy decisions should not be made in a domestic vacuum. Where gross gambling revenue taxes are used to generate public revenue, which should be inversely related to their elasticity, tax policy decisions should be made.

It is crucial to keep in mind that tax policy needs to be adjusted to consider the different stages of the gambling industry's development, the necessity of increasing public participation in safe gambling, the necessity of minimising the detrimental effects, all the while legitimately focusing on the industry to raise tax revenues and acknowledging the causes of problem gambling. According to Light and Rutledge (2010), tax structure and policy should consider (a) the reasons why gambling was legalised, such as the generation of extra funds to be donated to deserving social causes and typically to provide employment for the neighbourhood; (b) the demand characteristics of various gambling-related goods and services; (c) the market structure of the gambling industry in the relevant jurisdiction; and (d) simplicity of comprehension and application.

Table 12:        Comparing Gambling Taxation Regimes in Different Jurisdictions

Source:           Author's Construct

Given young Kenyans clear preference for gambling, evidence of its global commercialization, and its usage to boost tax revenues and employment opportunities, the sector presents a solid chance for the country to shape the interests of young people in ways that would result in positive outcomes.

1. 1. 3. Growing National and Individual Savings through Gambling

One of the reasons the industry has a negative reputation and attracts strong efforts to control is gambling by people from lower income households. By tying gaming and money transfers together, South Africa and Canada have tried to turn the tide on this. As shown at Annex 2, the Province of Ontario in Canada is examining four ways to use gaming to aid low-income households. One choice was to use cash transfers to distribute a portion of gambling profits to the underprivileged; another to promote asset building through a matched savings program; a third choice was to collaborate with financial institutions to provide prize-linked savings products; and a fourth choice is to use online gambling's marketing budget to raise money.

Somasundaram (2015) uncovered a sizable market for these innovations when they carried out an experimental investigation on prize-linked savings in the United States. They looked at the uptake and effects of prize-linked savings (PLS) accounts, which give individual account holders lottery-like pay-outs rather than interest. Cole (2021) discovered that a variety of people find PLSs intriguing, with those who are struggling financially and those without alternative deposit accounts being more likely to enrol. In a 2019 randomised clinical study involving 300 Kenyan men, Moscoe et al. (2019) discovered that prize-linked savings accounts can encourage more men to open savings accounts by offering better incentives.

These studies all point to a significant opportunity to agglomerate savings from the gambling instinct of various categories of persons and then apply the proceeds to welfare improving interventions. Each country can select actions aligned to their circumstances. In South Africa and Canada, the studies pointed to legal impediments that needed to be cleared to fully exploit this option of prize linked savings innovations to increase savings. The possibility for such innovations must be considered in the development of the applicable regulatory framework to avoid similar impediments in designing initiatives.

1. 2. Comparative    Good    Practice    in    Gambling    Regulatory Frameworks

Annex 1 provides a comparison of different jurisdictions with respect to their regulatory posture concerning gambling. It compares Singapore, the Principality of Monaco, Malawi, Australia, the United Kingdom, South Africa, and Nigeria. This comparison looks at the legal status of gambling, enabling laws, forms of gambling, market size, institutional framework, fiscal framework, and their responsible gambling framework. As can be appreciated, the comprehensiveness of the comparison is limited to the extent of the availability of data. But that which was available was sufficient to draw informed conclusions on the way forward for the Kenyan transformation effort.

1. 1. 1. Legal Status of Gambling

In all the jurisdictions reviewed, gambling is prohibited, unless it is licensed or exempted under the applicable legal framework. For instance, in 1856, Prince Charles III of Monaco granted an exclusive concession for construction of a casino in response to a financial crisis that affected the principality. Since then, gambling has been permitted in the Principality of Monaco.⁸ It is significant to note that Monaco residents are not permitted to gamble in these casinos. Singapore has a social gambling exception allowing spontaneous and not for gain gambling amongst family members. It is observable that the phenomena of granting gambling legality and licensing it is a largely 19^th Century phenomena, a harbinger to modern day commercialised gambling.

1. 1. 2. Legal Status and Regulation of Gambling

A noteworthy observation is that, despite accommodating new gambling forms, there has been a clear effort in the majority of jurisdictions to consolidate their gambling policies, laws, and regulations. These included online gambling and the incorporation of national lotteries. Inclusion of national lotteries has been largely as an instrument to extract significant economic rent from a sector associated with harms that require mitigation. It is also critical to note that the bolstering of licensing regimes has included anti-money laundering and combating financing of terrorism regulations as part of compliance requirements.

8              https://uk.practicallaw.thomsonreuters.com/w-027-8785?transitionType=Default&contextData=(sc.Default)&firstPage=true  Accessed  on 19 March 2023

1. 1. 3. Forms of Gambling

The forms of gambling legalised include land based and online gambling, lotteries, sports betting, and other games of skill and chance. The menu of the available forms vary with each country reviewed.

1. 1. 4. Responsible Gambling Regimes

Introduction of safeguards for consumers including minimum age requirements and verification procedures, consumer education requirements, restriction of gambling advertisements, deposit limits, problem gambler support, safer gambling tools, represent examples of measures governments have taken to regulate gambling and reduce its negative effects on society.

1. 3. Rationale    for    a    New,    Progressive     Gambling    Policy Framework

The gambling sector in Kenya is growing and today lies at the nexus between the moral view that gambling is a sin and the actual working of the economy, where one expects to be anything they want to be, if they exerted themselves enough. Additionally, there is a growing impression that the sector is contributing to social, economic, and public health issues. A number of different but linked causes, such as the following, will propel the sector's growth:

1. Kenya's demographic profile is that of a growing, increasingly youthful population, characterised by urbanisation, with significant levels of unemployment and underemployment.
2. Pro-gambling technological developments, their diffusion and quick adoption increasing access to and gambling opportunities.
3. Changing social values influenced by global and other voices, including gambling industry responses.
4. Increased institutionalisation and commercialization stimulating growth of popular gambling.
5. Rising demand for taxes and other public resources key to addressing the growing demand for public services.

These factors notwithstanding, the gambling sector is facing several challenges, including:

1. Regulation and enforcement: The regulatory environment in Kenya has been criticised for being weak and poorly enforced, leading to illegal and problem gambling. The Government has worked to tighten laws, but progress has been patchy and delayed.
2. Perceptions of High Taxation: The perceptions that the sector is subjected to high taxes and fees, which can make it difficult for operators to remain profitable. This perception has been fuelled by lack of adequate acknowledgement of the nature of the sector and adequate linkages to the harms occasioned by it. Further, some operators have also been accused of tax evasion, which has strained government revenue collection from the sector.
3. Unregulated Competition: In recent years, there has been an increase in the number of competitors competing for a piece of the Kenyan gaming market. Concerns regarding oversaturation and decreased sales have resulted from this.
4. Social impact: Concerns about the gambling industry's effects on society, particularly with regard to problem gambling and addiction, have been raised particularly in the face of visible and rising detrimental social and economic effects, such as an increase in addictions, poverty, and crime.
5. Technology and innovation: For the gambling industry, particularly in terms of online gambling and mobile betting, the rapid rate of technological progress has produced new obstacles. In order to stay competitive and compliant, operators must stay up to date with new rules and technologies.

With increasing reports of gambling related suicides, addictions, family break-ups and suspicions of the sector becoming an avenue for illicit financial flows, the State has sought to break-up, control and regulate enterprises in the sector. Globally, it has been realised that prohibiting gambling, in liberal and open societies would be extremely costly to enforce. The alternative is to treat gambling as a demerit good and therefore seek to balance the social and economic benefits of regulating gambling against its deleterious effects. Interventions, including safeguards against underage gambling and securing society are taking centre stage.

4. A POLICY FRAMEWORK FOR TRANSFORMING THE GAMBLING SECTOR INTO A FORCE FOR SOCIAL PROGRESS
   1. Introduction

The Gambling Policy 2023 has as its purpose "the transforming of gambling into a force for social progress," clearly acknowledging the challenge of gambling as a social, economic, and public health concern as well as the triple opportunity of enhanced tax revenues, creation of good jobs and fostering a national culture and psychology of "responsible betting and gaming," to promote and safeguard the wellness of all people.

1. 2. Constitutional Basis and Scope of the Gambling Policy
      1. Constitutional Basis for the Gambling Policy 2023

Article 1 (4) of the Constitution of Kenya 2010 provides that the people of Kenya shall exercise their sovereign authority at the national and county levels. Kenya's national territory is divided into 47 counties. Concerning gambling, Articles 186 and 189, as well as Schedule 4, Part 1 of the Constitution, assigns the National Government the functions of national economic policy and planning, national statistics and data, labour standards, consumer protection, capacity building, national betting, casinos, and other forms of gambling. Schedule 4, Part 2 assigns the county governments cultural activities, public entertainment, and public amenities, including betting, casinos, and other forms of gambling.

This being a concurrent function, the Intergovernmental Relations Technical Committee, through Gazette Notice No. 8753 of 8 September 2017 (see Annex 3), further clarifies the responsibilities of each of the two levels of government regarding this function. For instance, the National Government is responsible for policy formulations, legislation, the national lottery, standards, and norms for the sector, including gambling activities across counties. County governments are accountable for county-level betting activities, county lotteries, implementation, periodic reporting, and county-level gambling legislation, amongst others.

Governments at both levels must conduct their interactions collegially through cooperation and consultation to expand and leverage the gambling sector. Relationships that maximise

benefits for the two levels of government and the people they serve while successfully mitigating damages from gambling operations will require proper consultation and information exchange.

1. 1. 2. Scope of the Gambling Policy 2023

The overall scope of the Gambling Policy 2023 is to provide a framework within which the country can come to grips with the gambling opportunity while mitigating harms arising from there. It clearly defines what gambling is and seeks to exclude non-gambling activities. It outlines the guiding principles to be observed and strategic objectives to leverage the gambling industry to benefit the Kenyan people. It entrenches the responsible gambling framework as how the sector will be regulated and operated. It, above all else, seeks to ensure that gambling in Kenya is conducted safely, fairly, and responsibly while balancing the economic benefits of gambling with the need to protect vulnerable individuals and the wider community. In this regard, it then focuses on limiting the supply of gambling opportunities, licensing and regulation of gambling operators, player protection, harm reduction, and a clear gambling taxation framework to generate adequate revenues from this highly profitable sector. Finally, the policy seeks to secure an effective delivery framework for the proposals in this sector.

1. 1. 3. The Guiding Principles

The following principles shall guide this Gambling Policy 2023:

1. Shared Social Obligations: Gambling and gambling industry activities are a shared social obligation, particularly in ensuring the implementation of measures protecting against excessive gaming and helping those who get addicted to it to lead positive lifestyles.

2. Increased Revenue Generation: The policy should generate revenue for the government while being fair to the operators and considering the specific needs of the industry and the players.

3. Additionality of Lottery Proceeds: Funds raised through lotteries and other forms of gambling under this policy shall be additional to, and not a substitute for, existing government funding for social welfare and other public services. This is based on the understanding that such proceeds should never replace or be the basis for reducing government funding for essential services but rather supplement them.

4. Incorporating Savings Logic: Integrate the culture of savings into the gambling sector institutions, systems, practices, and procedures that encourage pro-saving products and services.

5. Balancing of Interests: Continuously seek to balance the interests of the public, the players, the industry, and the government considering the specific needs and priorities of each stakeholder and the imperatives of maximising returns to good causes while optimising returns to investors.

6. Transparency and Accountability: All parties in the gambling sector value chain will be encouraged to be transparent and accountable to their stakeholders in all their operations.

7. Responsiveness to Changes: The policy shall seek to be responsive to changes in the industry and the needs of the players and should be regularly reviewed and updated to ensure that it remains effective and relevant.

8. Enhanced Regulatory Compliance: The policy will seek to secure compliance with and observance of acceptable operational rules and standards on a social and international level. It will implement effective enforcement mechanisms to ensure that operators comply with the rules and penalties for non-compliance.

1. Fairness: The policy should be fair to all stakeholders, including the operators, the players, and the government, and should promote fair competition within the industry.

10. Robust Player Protections: The policy shall secure protections for players, including minors and consumers, and should promote responsible gambling practices. It will build the capacity and capability of the agencies in the sector to secure this.

11. Inclusive Stakeholder Engagement: The policy will strengthen inclusive engagement with key stakeholders, including the operators, the players, and other interested parties, to ensure that it reflects their needs and interests.

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- public consultation draft -

Chart 4:          The Nine Pillars for Gambling Sector Transformation in Kenya

Monday, 27 March 2023

KENYA VISION 2030

a newly industrializing, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.

CREATING SHARED VALUE

A Well-Regulated Gambling Sector, Generating Continuous Funding for Good Causes, Raising Significant Tax Revenues, Creating Many Good Jobs while Mitigating Industry Harms to Society

NEW GAMBLING POLICY FOR KENYA, 2023 - 2027

Transforming Gambling to a Force for Social Progress

RESPONSIBLE GAMBLING FRAMEWORK

National culture and psyche of “responsible betting and gambling”, nurturing and protecting the wellbeing of all persons

BOTTOM-UP ECONOMIC TRANSFORMATION AGENDA, 2022 – 2027

Economic turnaround and inclusive growth built on increased investments in at least five sectors - agricultural transformation; micro, small and medium enterprises; housing and settlement; healthcare; digital superhighway and creative industry – that will have the largest impact and linkages to the economy as well as on household welfare

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These principles are articulated in Chart 4, which shows the nine pillars on which the transformation of the gambling sector in Kenya to a force for social progress will be founded. These pillars secure clarity in the definition of gambling, enacting a robust national gambling sector regulation law, a law for establishing the national lottery, securing an effective and responsive gambling regulatory authority, establishing a strong and inclusive National Lottery Board, instituting clear performance standards for the sector, and establishing an enabling taxation regime that will facilitate the generation of resources while enabling the sector to grow. The responsible gambling framework seeks to promote "acceptable" behaviour in gamblers, premised on the fact that gambling harms some players. It presumes that operators and governments will take action to reduce the adverse effects of gambling (Chóliz, 2018). It is key to the effective operation and interaction of these pillars are key to ensuring the Bottom-Up Economic Transformation Agenda is effectively executed and secures the goals of Kenya Vision 2030.

The strategic objectives of the gambling sector transformation framework are presented in the following sections of this policy.

1. 3. The Policy Considerations and Strategic Objectives

This will be an evidence-based Gambling Sector Policy that will seek to build a growing, and progressive gambling sector that continuously maximises returns to good causes, strengthens the implementation of responsible gambling practices, and pursue the best interests of the industry, the players, and the government.

The specific objectives shall be to:

1. Ensure that the gambling sector is strictly, but fairly, licensed and regulated to prevent it from being a source of crime, and a supporter of crime or social disorder through clear, consistent enforcement, holding all actors to high standards of fairness, transparency, and accountability.

2. Ensure gambling is undertaken fairly, safely, and is not harmful to society, providing robust safeguards for vulnerable segments of society, including minors, the elderly, problematic individuals, and their families.

3. Establish comprehensive and inclusive consumer awareness, rehabilitation, and other support programs to mitigate against problem gambling, including

developing and deploying gambling products and services that are fair, transparent, well-regulated and cause no harm to society.

4. Establish a strong, widely supported National Lottery for pooling resources to be directed to carefully selected good causes or eligible Kenyan entities.

5. Continuously review the gambling sector taxation framework to ensure that it is appropriate and generates revenues for public services.

6. Establish and strengthen gambling sector institutions based on a clear needs assessment and ensure that they are capacitated to execute their mandates clearly, coordinated, and consistently.

7. Secure transfer of skills to Kenyans to build the capability to manage the sector in the medium to long term.

8. Directly funding critical areas is key to transforming gambling into a socially responsible sector.

1. Adopt a risk-based approach to continually reviewing each form of gambling and other practices in the sector and formulating inclusive and effective policy responses.

10. Leverage technology for effective management and governance of the sector and for developing and deploying new socially responsible gambling products and services.

11. Incorporate evidence-based, data-driven research and development to inform and drive decision-making for growing and shaping the gambling sector.
    4. Conclusions

The Gambling Policy 2023, in seeking to transform the gambling sector into a force for social progress, is built on eleven (11) guiding principles and strategic objectives, each built into nine (9) pillars that support the transformative effort for the gambling sector. These are geared at engendering a gambling sector that is responsible, caring, and supportive of the national development effort.

5. BUILDING A FORCE FOR SOCIAL PROGRESS: TRANSFORMING STRATEGIES FOR THE GAMBLING SECTOR
   1. Introduction

Market research on Africa’s and, indeed, Kenya’s gambling market is patchy. However, there is a consensus that the gambling sector has grown significantly in Africa and Kenya over the last fifteen years. Astute Analytica reports that it is expected that the African gambling market will reach a valuation of US$ 6.78 billion by 2030, up from US$ 3.62 billion, presenting a CAGR of 7.54%⁹. This trend reflects the growth of the gambling sector in Africa and globally. Another company, Research and Markets, states that the global gambling market will grow from US$ 465.6 billion in 2020 to US$ 895.6 in 2030, at a CAGR of 5.8%. The fastest-growing regions will be the Middle East (CAGR of 12.0%), Eastern Europe (CAGR of 10.8%), Africa (CAGR of 10.1%) and South America (CAGR of 9.9%)¹⁰.

Africa’s and Kenya’s growth will be largely driven by increased investment in electricity and telecommunications services driving appetite for online gambling, social gambling, and gambling apps; advertising and celebrity endorsements, a youthful, urbanised demographic, and global investors looking to invest. These are the ingredients for a perfect storm or, depending on how countries look at it, the opportunity to extract significant rents, address development challenges we face, and mitigate the harms occasioned by the gambling sector while gaining investors significant returns on their investment.

This growth provides an opportunity for Kenya to leverage the commercialisation of the gambling sector by ensuring that it helps secure its national development objectives. The suggested framework for regulating the transformed gambling industry in Kenya is shown in Chart 5, which shows that this is built around clarity on the reasons for undertaking gambling, regulating the integrity of the regulators, regulating the probity of the suppliers of gambling products and services; and regulating the supply of gambling opportunities. This framework incorporates the imperatives of responsible gambling that seek to mitigate the harms of gambling. The following parts explain Kenya's policy proposals for creating a safe and transformational gambling sector.

9                      https://www.astuteanalytica.com/industry-report/africa-gambling-market

10                    https://www.businesswire.com/news/home/20220316005705/en/Global-Gambling-Market-Opportunities-and-Strategies-Report-2022- Market-is-Expected-to-Grow-from-674703.9-Million-in-2025-to-895720.3-Million-in-2030---ResearchAndMarkets.com

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- public consultation draft -

Chart 5:          A Framework for Regulating the Transformed Gambling Sector in Kenya

Monday, 27 March 2023

Policy Approval

    SECTOR OPERATORS  

          CONSUMERS         

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1. 2. Roles     for     the     National     Government     and     County Governments
      1. Policy Goal

To ensure that operationalisation of the functions of each level of Government is done to secure responsible gambling while promoting a robust gambling sector, promoting the good welfare of the people of Kenya.

1. 1. 2. Background

The Constitution of Kenya 2010 completely restructured the gambling function, enshrining it as a concurrent function. In this regard, Articles 186 and 189 and Schedule 4, Part I and II of the Constitution of Kenya 2010 define the broad framework within which the gambling function shall be restructured. Gazette Notice 8753 of 8 September clarified the delineation of the gambling function between the National Government and County Governments. Since then, three county governments have moved to prepare regulatory frameworks to govern gambling activities at the county level, namely Nairobi, Nakuru and Kilifi. Of these, only Nairobi County has proceeded to gazette a law, the Nairobi City County Betting, Lotteries and Gaming Act, gazetted on 6 May 2021. Nakuru County and Kilifi County, which commenced legislative processes in 2014 and 2016, respectively, have never completed the process.

Further, the Government tabled a Gaming Policy of 2019 and the Gaming Bill, 2019, which did not pass. However, it is important to note key comments made by the National Assembly regarding the Gaming Policy of 2019 and the Gaming Bill 2019 concerning the county governments. They noted the need to avoid micromanaging county governments. They rejected the role of county governments being responsible for the enforcement, compliance spot-checks and daily supervision of casinos, and the assertion that licensing of amusement machines can only be done under the county government. It is also crucial to note that following the coming into effect of the Nairobi City County Betting, Lotteries and Gaming Act, 2021, there have been several court rulings which have struck out some parts of the law, for instance, the High Court quashed provisions that restricted gambling in the city to five-star hotels with casinos.

1. 1. 3. Policy Statement

Pursuant to Article 186 of the Constitution of Kenya 2010, Schedule 4, Parts I and II of the Constitution of Kenya, 2010 and Gazette Notice No. 8753, this National Gambling Policy, 2023 recognises gambling as a concurrent function.

1. 1. 4. The Strategies

Strategy 1. Ensure that gambling functions are delineated in the manner clarified in Gazette Notice 8753 of 8 September 2017 and in compliance with any judicial directions on the same matter.

Strategy 2. Strengthen engagement, coordination, and consultation mechanisms between the National Government and the 47 County Governments through established mechanisms without infringing on the integrity of either level.

Strategy 3. Facilitate capacity and capability and capability building of the National Government and the 47 County Governments to operationalise its obligations and responsibilities under the Constitution of Kenya 2010 as well as any applicable law in a manner that secures responsible gambling in their respective jurisdictions.

1. 3. Clarity in Definition of Gambling
      1. Policy Goal

To enhance the effectiveness of gambling sector regulation by defining gambling to ensure that it is comprehensive, inclusive, clear, and specific but narrow enough to not exclude new and emerging forms of gambling from regulatory view.

1. 1. 2. Background

Kenya defines gambling as "the act of placing or accepting a bet on the outcome of a game, competition, or other event, the result of which is uncertain and determined by chance" (Betting, Lotteries and Gaming Act, 1966). This definition is generally clear and specific, enabling distinction from other activities. It has a major weakness in that the definition is overly narrow and fails to capture newer forms of gambling like online and mobile betting. Because they are not captured, it becomes difficult to enforce and regulate against these newer forms of gambling, even though they generate the same harms.

The gambling industry is rapidly evolving, and new forms of gambling will emerge. Therefore, it is important to ensure that the policy, law, and regulations stay ahead of this sector, particularly given the social, cultural, and public health texts of gambling and the harms arising from it. Therefore, a clear definition of gambling is essential for effective regulation of gambling activities, properly distinguishes it from other activities, establishes clear guidelines on what is permitted and what is not, and facilitates effective enforcement of regulations.

1. 1. 3. Policy Statement

Gambling shall be comprehensively defined to ensure that all forms of gambling, including new and emerging forms, are included, and regulated in terms of this policy, the gambling law, and attendant regulations, while at the same time excluding non-gambling activities.

1. 1. 4. The Strategies

Strategy 4. Clarify the definition of gambling in the proposed Gambling Control Bill, 2023 to confirm that all gambling in Kenya, whether physical or online, is prohibited unless licensed or exempted under the law.

1. 4. Policy, Legal, Institutional and Regulatory Framework
      1. Policy Goal

To establish a supportive, regularly reviewed policy, legal, institutional, and regulatory framework to facilitate the gambling industry's transformation into a strong, broadly accepted tool for social advancement, in line with the nation's cultural and religious sensibilities.

1. 1. 2. Background

In order to ensure that the enormous expansion currently seen in the gambling industry is harnessed for the nation's benefit, significant adjustments will need to be made to the policy, legal, institutional, and regulatory framework as it currently stands. The inability of the entire regime to shape the obvious benefits and opportunities that have emerged is, in fact, the cause of the unfavourable perception of gambling. No single harmonized gaming industry policy paper offers a compelling perspective on maximising the potential of the important sector. The government hasn't always reacted in unison, but in recent years, it took action to slow the sector's expansion. Due to strong vested interests, a reactive approach, and failure of earlier reform efforts, the industry has not seen much success.

For instance, while the need for a National Lottery has been recognized as necessary for Kenya since independence, the movement towards this goal has been slow and patchy. Indeed, this sector has been handled with benign neglect, only attracting action, when security, moral and religious sensitivities have been activated. The policy chronology below illustrates this challenge:

1. Sessional Paper No. 10 of 1965, recognised that lotteries and gambling pools must be regulated to ensure that gains were invested in Kenya.
2. Sessional Paper No. 10 of 2012 on Kenya Vision 2030 proposed establishing a sports lottery fund and an international academy of sports to develop and nurture sporting talent with the potential for injecting more than KShs. 500 million into the sport budget annually.
3. In 2018, The Public Finance Management (Sports, Arts and Social Development Fund ) Regulations, 2018 were published that created a Fund that would receive proceeds raised through Section 69A of the Betting, Lotteries and Gaming Act and which are then apportioned or social development including universal health care (not exceeding 60%); promotion and development of sports (not exceeding 35%); promotion and development of arts (not exceeding 20%) subject to Cabinet approval (not exceeding 5%).
4. In 2019, the National Standardization Plan for 2016-2019 proposed adopting the standard IWA 17:2014 - information and operations security and integrity requirements for lottery and gaming organisations.
5. The Constitution at Schedule 4, Part 1(34), and Part 2(4)(a) assigns national gambling and county gambling activities to the two levels of government respectively. The Intergovernmental Relations Technical Committee through Gazette Notice No. 8753 of 8 September 2017 further delineated this function.

A coordinated effort by H.E. the President in 2023, in support of the Bottom-Up Economic Transformation Agenda, offers a crucial opportunity to ensure the transformation of the gambling sector. By leveraging the potentially enormous gambling sector, resources can be pooled to raise significant revenues without raising taxes or placing an undue burden on vulnerable members of society. At the same time, funding is directed to frequently overlooked but important causes in Kenyan society. Chart 6 illustrates the proposed restructuring of the regulatory arrangements for the transformed gambling sector.

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- public consultation draft -

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1. 1. 3. Policy Statement

The Government will review the policy, legal, institutional, and regulatory framework and establish a reinvigorated, capacitated, and capable set of institutions that will drive Kenya’s gambling sector to become a positive instrument for national progress. At this initial growth stage of the transformed gambling sector, the Government will seek secure credible, believable, and trusted institutions. In addition, as part of an overall risk management strategy, will seek to quarantine key institutions in the sector and ensure they focus on clear singular missions, as they build capacity and capability to manage a more complex sector.

To enable consumers of gambling products and services to make rational and sensible choices while gambling in a way that prevents gambling from becoming a problem the Cabinet Secretary, the Gambling Regulatory Authority, the National Lottery Board, and all operators shall adopt strategic and inclusive frameworks for responsible gambling as they adopt and implement harm reduction strategies. This will provide a comprehensive, coordinated approach to the problem gambling risk that aims to lessen the effects even while the gambling business expands.

In addition, gambling sector must transform in a manner that it can raise substantial resources that are sufficient to meet the demand for development resources to support important social programs, to ensure that these resource flows are stable during periods of decline, and to ensure that the industry internalizes the negative effects of problem gambling. The Government will therefore put in place a responsible and facilitative gambling sector policy that will enable the sector to grow while addressing the harms accruing from the sector in ways that ensure the full revenue potential from the gambling activities is exploited.

Further, to ensure that Kenya's gambling industry does everything possible to prevent itself from serving as a conduit for illegal financial flows, money laundering, and terrorist funding operations. The Government will build a culture of compliance with anti-money laundering requirements by the gambling sector as provided for under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009; the Proceeds of Crime and Anti- Money Laundering Regulations, 2013; the Prevention of Terrorism Act, No. 30 of 2012; the Prevention of Organised Crimes Act No. 6 of 2010 as the appropriate Financial Action Task Force (FATF) guidelines or any other policies, laws, regulations, and guidelines.

1. 1. 4. The Strategies

A Transformative Gambling Policy, 2023 - 2027

Strategy 5.     Commit to development and approval of a Transformative Gambling Policy by the end of June 2023.

Role of the Cabinet Secretary Responsible for Gambling

Strategy 6. The Cabinet Secretary responsible for gambling shall be the custodian and implementer of the Gambling Policy and the Gambling Control Bill, 2023 as well as subsequent variations.

In addition, there shall be a shared objective, between the Cabinet Secretary responsible for the National Lottery, the Gambling Regulatory Authority, the National Lottery Board as well as operators in the sector to ensure protection of players, compliance of operations with the proper norms and standards, maximise the returns to Good Causes.

Further, they will be required to hold an inclusive annual symposium on the status of responsible gambling in the country, the recommendations of which will be applied to strengthen the sector in the country.

Role of the Cabinet Secretary Responsible for the National Lottery

Strategy 7. The Cabinet Secretary responsible for the National Lottery is primarily responsible for maximising the yield from the National Lottery and the funds returned for Good Causes.

They oversee the National Lottery Board, the National Lottery Fund, and the Operator of the National Lottery to ensure they secure set performance standards.

In addition, they shall have a shared objective, together with the Cabinet Secretary responsible for Gambling, the Gambling Regulatory Authority, the National Lottery Board as well as the Operator of the National Lottery of ensuring protection of players, compliance of operations to proper norms and standards, maximise the funds returned to Good Causes.

A Revamped and Robust Gambling Control Bill, 2023

Strategy 8. Formulate and have approved by June 2023 a new gambling regulation law, together with any new regulations thereof. The proposed robust Gambling Control Bill, 2023 will provide for:

1. 1. 1. 1. outlawing of gambling, except where licensed or exempted under this law;
         2. control and licensing of betting, casinos, and other forms of gambling;
         3. authorization of prize competitions and public lotteries;
         4. assigns the Cabinet Secretary the mandate of convening a National Responsible Gambling Review Caucus every year;
         5. assigns a joint and individual responsibility to the Cabinet Secretary, the Principal Secretary, the Gambling Regulatory Authority, and the National Lottery Board to secure that net proceeds of the National Lottery are as great as possible.
         6. establishment of the Gambling Regulatory Authority;
         7. establishment of the National Lottery Board;
         8. establishment of the National Lottery;
         1. establishment of the National Lottery Fund;
         10. establishment of the Gambling Appeals Committee;
         11. safeguards and protections of consumers at risk of harm;
         50. securing transparency and good governance;
         1000. prescribe offences and penalties;
         14. imposition and recovery of a tax on betting and other forms of gambling;
         15. transparent and accountable resolution of disputes;
         16. provide for a seamless and smooth transition of the Board and Secretariat of the Betting Control and Licensing Board to the Gambling Regulatory Authority and
         17. for connected purposes.

A Trusted and Agile Gambling Regulatory Authority

Strategy 9. Transform the Betting Control and Licensing Board into a robust, trusted, and agile Gambling Regulatory Authority responsible for regulating a safe and transformative gambling industry in Kenya. The proposed functions of the proposed regulatory authority will include:

1. scrutinizing, licensing, regulating, and controlling gambling in or affecting Kenya to ensure that it is conducted safely, honestly, and free from undue or criminal influence and exploitation;
2. issue licenses to all gambling sector operators, including the National Lottery Board, under this Act;
3. establish and enforce standards for betting, lotteries, casinos, and all other forms of Gambling in collaboration with the Ministry responsible for related matters.
4. inquiring into, and making recommendations to or otherwise advising the Cabinet Secretary on, matters relating to gambling, either on its motion or upon the request of the Cabinet Secretary;

5. researching and inquiring into matters relating to the control of gambling, including the integrity and financial security and viability of persons involved in the management of gambling operations;
6. working collaboratively with relevant public, private, or civil society to reduce prevalence of problem gambling and severity of harm from gambling;
7. enforce requirements for safe and responsible gambling, including adequate protection of consumers of gambling services;
8. working collaboratively the National Police Service, other security agencies and public authorities or other persons (whether in or outside Kenya) responsible for investigating and prosecuting crimes, or for the regulation and control of the conduct of gambling, including sharing information with them for crime prevention and in circumstances where the Authority reasonably suspects an offence under any written law or other law may have been committed;
1. fostering responsible gambling and minimizing the harms from gambling;
10. setting and maintaining appropriate norms, standards, and levels of accountability for the conduct of gambling in Kenya;
11. establish and maintain an up-to-date register of all operators, gambling machines and devices;
50. conduct security checks vetting and due diligence in respect of gambling activities;
1000. establish systems and procedures for protecting data of its clients, including operators and consumers of gambling services, in line with prevailing Data Protection Laws;
14. establish an electronic central, real time gambling monitoring system to monitor compliance with all licensing and regulatory requirements;
15. carry out, alone or in liaison with other institution’s locally or internationally, research into the gambling sector including forms of gambling, emerging trends and practices, socio-political and economic causes of gambling, attitudes, perceptions, risk factors, and behaviours, promotion of safe and responsible gambling prevention, rehabilitation, and treatment;
16. disseminate its findings to stakeholders concerned with regulation of the gambling industry to assist them in their policy planning and formulation; and
17. performing such functions as this or any other Act may confer on the Authority.

Strategy 10. Assess the staffing, procedures, systems, assets, and resource requirements for the Gambling Regulatory Authority to ensure that it is a capable, responsive, reliable, and credible world class regulator for a complex and rapidly evolving gambling sector. That it is protected against risks, including compliance and performance risks, that would damage its credibility as a regulator and detract it from facilitating the achievement of the policy objectives of this transformed sector.

Securing Continuous Performance in the Gambling Sector

Strategy 11. The Gambling Regulatory Authority shall continuously and on a regular basis monitor and report on its performance and the performance of all its licensees based on a clear outcome-based performance framework built around:

1. Precautions taken to identify vulnerable individuals if they attempt to gamble;
2. Precautions taken to prevent self-excluded individuals from gambling if they attempt to do so;
3. Consumers have a positive perception of gambling as fair and trusted;
4. Consumers are better able to make informed decisions;
5. Reduced levels of children and young people gaining access to age-restricted gambling products;
6. An industry that puts the licensing objectives at the heart of everything it does;
7. Stakeholders are confident in the way gambling is regulated;
8. A National Lottery operated fairly;
1. Maximised National Lottery returns to good causes;
10. Gambling Regulatory Authority has an efficient and engaged workforce;
11. A fair and proportionate fee structure;
50. Gambling Regulatory Authority is considered internationally as an example of regulatory excellence;
1000. A regulatory framework that allows for innovation and growth; and
14. Any other indicator identified and deemed necessary.

Performance against these outcomes is monitored by Gambling Regulatory Authority every quarter, with a summary of performance reported through the Gambling Regulatory Authority’s annual report.

Compliance with Appropriate Norms and Standards

Strategy 12. The Gambling Regulatory Authority will develop appropriate National Norms and Standards that will facilitate consistent and predictable application of all facets of the National Gambling Policy, 2023 across the country.

Strategy 13. The Gambling Regulatory Authority working with the Kenya Bureau of Standards and accredited international test labs will secure the establishment of a laboratory to test and certify all gambling machines to ensure that they comply with the relevant national and international standards.

Strategy 14. The Gambling Regulatory Authority working with the Kenya Bureau of Standards will adopt or develop relevant international standards, certifications and audits for the gambling sector operators and suppliers.

The National Lottery Board

Strategy 15. Establish a National Lottery Board (NLB) whose sole function shall be to manage and operate the National Lottery, on its own or through a private operator, upon issuance of a license by the Gambling Regulatory Authority. The NLB will own all Intellectual Property Rights and Trademarks of the National Lottery developed by the Private Operator.

The NLB will ensure that National Lottery is efficiently operated and that the net proceeds from the National Lottery are as large as possible. It will facilitate a National Lottery that is beyond reproach.

The National Lottery Board will secure selection of a competent operator, with a clear track record in establishing national lotteries in similar markets.

The National Lottery

Strategy 16. The NLB shall establish a new National Lottery that will be built as a distinctive, inclusive, strategic national asset, seek to be the best in the world, capturing the imagination of all of the Kenyan people, be seen as a legitimate way for winning/spending money, that is inclusive, accessible across the country, with adequate safeguards, run by a competent entity in a transparent and accountable manner while generating resources to be distributed to clearly selected good causes across the country.

The National Lottery will be the only national government backed lottery, licensed by the Gambling Regulatory Authority; and operated by a competent, competitively recruited private operator, with experience on the operation of a National Lottery in similar jurisdictions.

The sole purpose of the Private Operator will be to manage and run the National Lottery, promote its constituent lotteries, ancillary services, and other activities incidental to these. Whether operated by the National Lottery Board or the Private Operator, the National Lottery ensure maximum returns for good causes. Box 1 provides an indicative schedule of some key performance indicators for the operator.

The National Lottery will be expected to acquire a significant gambling sector market share within the first three years, will comprise five tier jackpot and seasonal winnings at the ward, constituency, county, region, national levels; contribute 4% of ticket price to savings; incorporate Prize Linked Lottery Savings Accounts or Lottery Linked Deposit Accounts to enhance savings; provide clear safeguards, including child protection and problem gambler rehabilitation as well as clear contributions for distribution to good causes.

Branding and Marketing of the National Lottery:

Strategy 17. This National Lottery will be built around a Uniquely Kenyan and Trusted Brand creating awareness of good cause funding; that is unique and relevant, drives product appeal across different population segments, has a pre-eminent voice in our psyche. It will be accessible to all Kenyans who want to participate, with clear links to consumer savings.

The National Lottery Brand will build on and drive patriotism by Kenyans –

BY KENYANS, FOR KENYANS, TO BUILD KENYA!

The National Lottery will appeal to Kenyans patriotic spirit through an emotive brand campaign. It will launch and position as a Kenyan-owned entity whose proceeds return to the community through various good cause projects. It will present a win-win value proposition, win as you play and build your country, speaking directly to Kenyans and appealing to their collective- good spirit.

The lottery will have affordable product options that are easily accessible by punters across both offline and online channels. The commercial goals of the National Lottery will be fuelled by an aggressive Marketing and Advertising strategy across different channels with the main objective of increasing the sign up of new users, maximising earnings on active users and encouraging repeat plays across the platform. An effective marketing strategy will assist in transitioning punters from the sports book to the lottery vertical.

Consistent actualization and launch of Good Cause programs and projects by the National Lottery Fund will build credibility and trust among Kenyans translating to increase in users and revenue.

Distribution of National Lottery Funds for Optimal Good Cause Funding

Strategy 18. Credible distribution of proceeds is the key to securing a strong and sustainable growth of funding to good causes, appropriately funding the various regulatory entities, and ensuring that any private operator earns a good return on their investments. It is proposed that proceeds of the National Lottery be distributed as follows:

The National Lottery Fund

Strategy 19. Establish a National Lottery Fund whose functions shall be to:

1. Receive funds from:
   1. revenue disbursed to it from the National Lottery proceeds;
   2. a share of operator profits when such profits are greater than the profits forecast National Lottery Licence Bid;
   3. any prizes not claimed within 90 days of the draw date for National Lottery;
   4. interest earned on unclaimed prizes while they remain in an account to be specifically to receive all prizes due and only reimburses the operator when prizes have been paid to National Lottery players;
   5. any gifts, grants donations or endowments made to the Fund;
   6. raise funds through investments approved by National Treasury in writing;
   7. any Gambling Regulatory Authority licensee penalties; and
   8. income from National Lottery ancillary activities.
2. Distribute funds to various good causes, programs, projects, or initiatives, in the portions detailed in the Gambling Regulation Law or as variously amended.
3. Managers of the Fund shall be obligated, to ensure maximum funds go to good causes, to safeguard the money, invest it wisely following requisite approvals, apply it only to the approved good causes and to annually report to H.E. the President, The National Assembly, the Senate, as well as to any entity to which the law requires that they report.
4. Distribution of the funds should be as transparent as possible, and consideration should be given to including neutral parties in determinations for distribution.
5. The National Lottery Auditors should be changed every three years.

Enhancing Individual and National Savings

Strategy 20. In order to focus on the national imperative of growing individual and national savings, it is proposed that 4% of the turnover of the national lottery be targeted for long term savings. This means that for each lottery ticket, 4% of the value shall be kept as savings in an appropriately designated entity for each individual player.

Beneficiaries of the National Lottery Fund

Strategy 21. Eligible beneficiaries of the funds to be distributed by the National Lottery Fund shall, in the first instance, be the following:

These good causes are further articulated at Annex 4.

The Cabinet Secretary responsible for the National Lottery shall, in consultation with the Gambling Regulatory Authority have the power to, from time to time, amend this apportionment.

Good causes are understood to mean socially useful activities or events that are beneficial to the public or a segment thereof and not managed solely for profit. These are further detailed at Annex 4 of this Policy.

Eligible beneficiaries will include national teams, public benefit trusts, non- governmental organisations, community-based organisations, self-help groups, societies, trusts, recreational clubs, cultural bodies, and educational clubs. They must be Kenyans - both natural and legal persons and must be tax compliant. Both State and Non-State actors are eligible.

Foreign entities, unless they have a local presence with clear evidence of current / ongoing interventions with a significant impact on the Kenyan citizens and communities, DO NOT qualify.

Any applicant, including domestic individuals and entities, whose officials have failed applicable prior clearance procedures are not entitled to receive payments from the National Lottery Fund.

The National Lottery Fund shall develop a simple, clear, comprehensive transparent and accountable eligible and widely publicise a beneficiary application process, including online.

Every three (3) years, this allocation will be reviewed, and the approved allocation and qualified recipients will be published in the Kenya Gazette.

The Gambling Appeals Committee

Strategy 22. Create a Gambling Appeals Committee that will work on an as-needed basis to guarantee that complaints are resolved quickly. The gambling appeals committee's duties include hearing and ruling on appeals:

1. against the decision of the Authority;
2. regarding complaints arising out of the outcome of a gambling transaction;
3. regarding complaints arising out of the functionality of gambling machines and equipment; and
4. regarding any other matter that may be prescribed under this Act.

Integrating Responsible Gambling in the Gambling Sector

Strategy 23. The Cabinet Secretaries, the Gambling Regulatory Authority, the National Lottery Board, and all operators shall adopt strategic and inclusive frameworks for responsible gambling to implement harm reduction strategies. This will provide a comprehensive, coordinated solution to the problem gambling issue that aims to lessen the effects even while the gambling business expands. Elements of this responsible gambling framework shall include:

1. reinforcing the requirement that the minimum age at which gambling can take place shall be eighteen (18) years enforced through Robust Customer Identity Verification Mechanisms, for land-based and online, that will require all licensees to obtain and verify information establishing the identity of a customer before they are allowed to gamble, including the customer’s name, address, and date of birth.
2. setting and establishing Minimum Bet, Minimum Buy-in; and Maximum Spend

thresholds appropriate for each form of gambling.

3. banning the use of Credit Cards in gambling transactions.
4. incorporating Gambler Exclusion Orders, including through self-exclusion requests, venue-initiated requests, court ordered exclusions or requests by families or interested parties. These shall be published in an Exclusion List containing the name of the person, their date of birth, date of exclusion and their photo ID. The Exclusion List shall be capable of being queried and shall be available on the website of the Gambling Regulatory Authority. Appropriate procedures for removal from this Exclusion List shall be provided for.
5. provide for Gambling Advertising Restrictions with strict guidelines around times, places, types, and content of messages for broadcast and the attendant responsible gambling messaging requirements.

Strategy 24. The Gambling Regulatory Authority shall establish and maintain an effective Toll-free National Gambling Helpline available 24 hours, 365 days, that will include clear follow-up mechanisms and accountability processes.

Strategy 25. As part of their license obligations, all actors shall implement a Responsible Gambling Codes of Practice, on the pain of robust penalties and sanctions, in their businesses and submit quarterly and annual compliance reports.

A Facilitative Gambling Sector Taxation Framework

Strategy 26. The Government will put in place a responsible and facilitative gambling sector taxation framework that will secure continuous, increased, and sustainable funding to good causes, enable the sector to grow through ensuring optimal returns for investors, while addressing the harms accruing from the sector in ways that ensure the full revenue potential from the gambling activities is exploited.

Strategy 27. The Government through the Kenya Revenue Authority will, in a consultative process, strengthen existing tax administration mechanisms to optimise revenues from the gambling sector, including expanding the framework for real-time collection of taxes from operators at source.

Strategy 28. The National Treasury in collaboration with the State Department responsible for the gambling sector to undertake a revenue potential study for the gambling sector considering the size, growth, and complexity of the sector, on which basis tax proposals that will facilitate increased revenue mobilisation, enhanced tax compliance, and support sector growth while facilitating a thriving sector.

Robust Anti-Money Laundering and Anti-Terrorism Financing Commitments

Strategy 29. The Government will build a culture of compliance with anti-money laundering requirements by the whole of the gambling sector as provided for under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA). No. 9 of 2009; the Proceeds of Crime and Anti-Money Laundering Regulations, 2013; the Prevention of Terrorism Act, No. 30 of 2012; the Prevention of Organised Crimes Act No. 6 of 2010 as the appropriate Financial Action Task Force (FATF) guidelines or any other policies, laws, and regulations.

Strategy 30. The Gambling Regulatory Authority shall be made a supervising institution under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 and the definition of “designated non-financial businesses or professions” that currently only references casinos (including internet casinos) shall be expanded to include all licensees of the Gambling Regulatory Authority, who shall be reporting institutions under the same law.

Strategy 31. The Gambling Regulatory Authority shall develop and issue an enforceable Anti-money laundering-Countering the Financing of Terrorism (AML-CFT) Code for Gambling Operators, which will form part of the operators licensing requirements. The AML-CFT Code shall be made appropriate for the different categories of licensees.

Strategy 32. The Gambling Regulatory Authority will produce an annual Kenya Gambling Sector Risk Assessment Report and disseminate it to interested parties, including sharing an appropriate publicly available version.

Strategy 33. The Gambling Regulatory Authority will review its staffing, systems and procedures to it and the sector to comply with the AML requirements.

Strategy 34. All staff of the Gambling Regulatory Authority, the National Lottery Board, and the Gambling Appeals Committee will undergo the appropriate vetting procedures in compliance with Kenya’s anti-money laundering and prevention of terrorism financing laws.

Strategy 35. All licensees of the Gambling Regulatory Authority including Shareholders, Directors and senior staff members will undergo vetting to ensure no persons or entities with integrity issues operate in the sector.

1. 5. Revitalising Other Forms of Gambling in Kenya
      1. Policy Goal

It shall be the policy of the Government to create the necessary conditions to support the revival and revitalisation of public gaming in a manner that secures strong backward and forward linkages to the national economy.

1. 1. 2. Background

Use of gambling and gambling activities as an economic and social development strategy presents significant ethical dilemmas, particularly given the societal harms associated with them. Experience from other jurisdictions suggests that gambling activities may be

support      strong       responsible gambling frameworks.

Kenya has a youthful and growing population. This is a population with wide interests in sports of various types. It is useful to consider that we develop sports, both as an instrument of nation building as well as an entertainment activity, to be an arena where our young people can be usefully engaged, leveraging on that the already prevalent sports betting engagement of Kenyans. In addition, given Kenya’s strong tourism   value   proposition,   it

makes sense to consider carefully regulated gambling enclaves as a different tourism product ought to be considered.

1. 1. 3. Policy Statement

The licensing frameworks for other forms of gambling will be restructured to earmark part of their proceeds to strengthen good cause support as well as strengthening the framework conditions that will revive public gaming as a form of alternative tourism product, built around the already very strong tourism value proposition in Kenya.

1. 1. 4. The Strategies

Strategy 36. In order to ensure that the entire gambling sector uniformly carries the burden of securing increased resources for good causes and to drive responsible gambling, the Cabinet Secretary shall in consultation with the Gambling Regulatory Authority prescribe the percentages of the gross gambling revenue that a licensee, other than the National Lottery, shall devote to good causes.

Strategy 37. The Cabinet Secretary responsible for gambling shall convene a meeting of key stakeholders in public gaming to explore mechanisms through which this segment of the gambling sector can be revitalised, including establishment of gambling enclaves in a select, but limited number of sites across the country.

1. 6. Conclusion

The thirty-seven (37) strategies included in this policy document are instrumental in ensuring that we build a transformed gambling sector that secures responsible gambling in Kenya, protects our children and vulnerable members in our society from harms associated with gambling, extracts on a continuous and sustainable basis increased economic rents to fund good causes, including gambling harm mitigation initiatives, while ensuring investors make a decent return on their investments. The strategies articulated here ensure that resources generated through a reinvigorated gambling sector reactivate key, but neglected sectors in the economy, including raising the profile of sports, culture, and national heritage activities in the country. With more than 65% of our people aged below 35 years, these activities are essential to providing meaningful and gainful engagement to our young people going forward.

6. DELIVERY FRAMEWORK
   1. Introduction

The gaming industry is a problematic area that is only starting to stand on its own. Strong arguments are made both in favour of and against establishing a thriving commercial gambling industry that supports governmental development objectives. As a result, this must be considered when attaining the strategic goals envisioned under Kenya's new gaming regulatory framework. Technology is also fast altering how consumers access gambling products; with all the risks it entails. Additionally, the necessity of minimizing the sector's negative effects must continue to be at the core of all efforts to harness the industry.

The following will ensure delivery of this policy:

1. Consistent, Capable and Inclusive Leadership
2. Robust Governance of the Gambling Sector and Its Institutions
3. Capacity and Capability Development Framework
4. A Change Management Strategy
5. A Robust Implementation Plan with a clear Monitoring, Evaluation and Review Framework
6. A Risk Management Strategy
   2. Consistent, Capable and Inclusive Leadership

The leadership for the gambling sector will be the State Department in charge of carrying out the transformed gambling sector policy. The Gambling Sector Regulation Law or another law passed by the Kenyan legislature will serve as the custodian of this policy. They must ensure that the National Values described in this policy are aligned to Article 10 of the Constitution of Kenya.

It will make sure that high-level policy support is obtained for the implementation of this strategy from all branches of the government and mission-critical players, including the public. There will be consistent, competent, and inclusive leadership to make sure that:

1. By outlining the strategic policy principles contained in this policy and other implementing tools, we create an enabling environment.
2. Ensure that the Constitution's gambling-related provisions are adequately implemented and that the main goals are not diverted from.

3. Engage stakeholders to ensure that the industry develops, implements, and reviews as necessary responsible gambling rules, gambling standards, and investment policies.
4. initiate research in the sector by providing the appropriate resources and political support and shall also start the review of this and other programs that are supported by this Policy.
5. instilling/ developing appropriate behaviours and attitudes necessary to deliver a transformed gambling sector are secured at levels.
6. Competition for policy spaces managed in manner to ensure the policy’s strategic objectives are maintained.
7. Attracts more consumers and improves service quality;
8. Leverages technology to deliver on the strategic objectives of the sector;
1. Implementation timelines are met through proper planning and execution of programs, projects, and initiatives.
10. Accountable and transparent stewardship of resources for delivery of the policy.
11. Performance outcomes from the various actors, including oversight, policy, regulatory and service delivery agents are achieved; and
50. Rewards and sanctions are applied justly, fairly, and timely, consistent with the expected outcomes.

The State Department responsible for the Gambling sector shall collaborate with the entities described in Table 13, with various responsibilities.

Table 13:        Roles of Support Agencies in Delivering a Transformed Gambling Sector

This list while not exhaustive, reflects the intent of this policy to be inclusive in securing a transformed gambling sector, that positively contributes to the Bottom-Up Economic Transformation Agenda and Kenya Vision 2030.

1. 3. Robust    Governance   of    the   Gambling    Sector    and    Its Institutions

Building organizations that are reliable, believable, and trusted by players along the entire value chain of the gambling industry is crucial. As they expand, this will require that important institutions do focus on their fundamental tasks in some circumstances. This is necessary to prevent a failure by one agency from tainting the entire industry. All institutions must, in this regard, be accountable to and transparent with the players in the value chain of the gaming industry. In addition, funding arrangements across the sector will ensure that such agencies have adequate and reliable resources to meet demands of their evolving mandates.

1. 4. Capacity and Capability Development Framework

Delivery entities are only as good as their people and systems. Strong efforts will be made to define the people and systems requirements of the various agencies proposed to manage the gambling sector. A careful mix of existing and new staff will be recruited to ensure that the policy, regulatory and delivery actors are capable and match the competencies of well- resourced private sector operators. More importantly, they must be responsive to all and non-consumers of gambling products and services.

1. 5. A Robust Change Management Strategy

The transformed gambling sector that this policy aspires for Kenya is vastly different from todays in terms of structure, underpinning values and norms, the demographic of the consumer and the rapid technology driven change. Policy and its implementation instruments must not lag industry developments. The main aim of the proposed change management strategy will be to ensure that policy objectives are secured by ensuring that the various agencies are fit for purpose, that they comply with the constitutional and legal requirements and risks are identified on time and appropriately mitigated.

To effect the necessary changes in a manner that ensures all mission critical stakeholders are not left behind, the various implementing agencies will:

1. develop strategies to engage with and communicate to their various external and internal stakeholders to secure buy-in, reduce misunderstanding and to build support for the various policy interventions;
2. seek to build trusted and reliable brand identities, key to reducing resistance and promoting active engagement by all the stakeholders;
3. seek to adopt new institutional and organisational cultures that enable internal and external stakeholders to accept the deep changes envisaged under this new policy framework.
4. undertake regular review of perceptions, track changes in these perceptions and appropriately deploy responses at all levels to achieve these policy objectives.

The change management process will involve preparation for change, creating a vision for change, and implementing the changes and their entrenchment in the expanded gambling sector. This will also include reviewing and analysing any proposed regulatory changes. The changes to be effected in implementing will include enhancement of regulatory framework, implementation of new regulatory technologies and processes within the sector and regulatory risk management.

1. 6. Risk Management Strategy

There are several risks that could affect implementation of this policy. These include social and economic consequences; legal and regulatory issues; operational risks; political risks; and financial risks as described in Table 14.

Table 14:      Risk Management Matrix for the Transformed Gambling Sector Policy

1. 7. Monitoring, Evaluation and Review of the Policy

There will be established a clear and comprehensive framework for inclusive and continuous review of this policy, every three years. This review will track key responsible gambling outcomes, performance of the national lottery, generation of revenues, taxes as well as creation of jobs.

1. 8. The Implementation Plan

Table 15 describes the implementation plan for the policy.

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Table 15:        Draft Implementation Matrix for the Transformed Gambling Sector Policy

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7. CONCLUSION

The National Gambling Policy 2023 is the first, comprehensive document that seeks to define and leverage the gambling industry in Kenya as a key sector for national transformation. It takes cognisance of the tremendous growth and change in the gambling industry over the last ten (10) years since the introduction of mobile and online gambling platforms from land-based operations. It balances the interests of all key players in the sector, taking careful cognisance of their varied concerns. In this regard the policy entrenches the responsible gambling paradigm into all actions by all actors in the gambling industry value chain from the policy makers, the regulators, through to the operators and consumers of gambling industry products and services. Through implementation of this document the government will provide a conducive and enabling licensing system and ensure that all agencies related to gambling as well as responsible gambling are catered for.

Table 16:      The Transformed Gambling Sector in Kenya

Table 16 provides a summary of how the National Gambling Policy 2023 will facilitate the transformation of the sector, on the back of a vibrant National Lottery and robust sector

safeguards. It considers the complexity of the gambling sector and the rapid changes taking place and proposes measures that account of the various segments of the gambling market seeking to regulate according to the diversity and operational needs of each gambling sub- sector operation.

It is expected that this National Lottery will, in this fashion, achieve the following targets in its first three years of operation:

• Conservatively grow eligible citizen participation from 9.87% to 37.32%, across all age groups. Efforts to secure increases in citizen participation, and therefore National Lottery yield, will include increased prize pay-outs, scope and number of games, as well as elaborate and comprehensive advertising, all compliant with responsible gambling imperatives;

• Generate a National Lottery Turnover in Year one of KShs. 31.74 billion in 2024 to KShs. 59.48 billion in 2026 and KShs. 110.43 billion 2033 in the low case scenario as illustrated in Chart 7 below;

Chart 7:        Estimated National Lottery Turnover (in KShs. Billion)

• Assuming a return of 10% on savings, based on the low case scenario, at 4% of the National Lottery Turnover, the players will have accumulated savings to the tune of KShs. 44.9 billion by the end of 2033. The projected savings grow to KShs. 106.8 billion (Mid Case Scenario) and KShs. 161.8 billion (Best Case Scenario).

• Based on these projections, Prize Winnings will grow from KShs. 14.04 billion in 2024 to KShs. 26.32 billion in 2026 for a total of KShs. 62.48 billion for the first three years. These funds, through forward looking investment arrangements will generate multiple investment opportunities, beneficial to the wider economy.

• Funding for Good Causes is estimated to be KShs. 47.49 billion in the first three years of the National Lottery. These good causes will include charitable causes, economic empowerment interventions, sports, recreation, arts, culture & national heritage; signature transformation projects and provisions for emergencies.

• Operation of the National Lottery is expected to generate KShs. 34.52 billion in taxes, including corporation taxes in the first three years. It is expected that about KShs.

33.57 billion, being gambling taxes, will go to the Sports Fund, further strengthening funding for good causes.

The policy, therefore, lays a solid foundation for the first National Lottery which is expected to generate significant resources to service a variety of carefully defined good causes. This will be the only National Lottery that will be backed by the National Government. It is expected to continuously develop and distribute innovative and diversified products and services that uniquely appeal to the different consumer segments. More importantly, the National Lottery will be built around a strong brand identity, seeking to secure national unity, resonate with customers and inspire trust and loyalty. The National Lottery is expected to prioritize a positive and rewarding customer experience. More significantly, the National Lottery will enhance social responsibility by supporting good causes and increasing pay-outs to consumers.

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9. ANNEXES

Annex 1:    Comparative Good Practice Analysis of Gambling Regulatory Frameworks

Notes:

1.         https://singapoíelegaladvice.com/law-aíticles/gambling-legally-home-public-online-singapoíe/ Accessed on 17 Maích 2023

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Annex 2:    Turning Aces into Assets: The Case for Gambling Reform in Ontario

RETURN ANNUAL GAMBLING PROFITS TO THE POOR THROUGH CASH TRANSFERS

A separate fund of gambling profits could help the victims of Ontario’s gambling scheme in several ways. One of the simplest options would be to give the money directly back to the poor through cash transfers. Instead of subsidizing general spending with a regressive tax taken from the pockets of the poor, the group disproportionately providing the tax would be the group that benefits from the tax. This policy would in many respects be no different from existing sales- tax rebate programs like the GST/HST tax credit. Each year, the province’s total gambling profits would be divided among all adults or households below a certain income cut-off; the government could send a cheque to each recipient, deposit the money in a TFSA, or distribute the money through the tax system as a refundable credit.

PROMOTE ASSET BUILDING THROUGH A MATCHED SAVINGS PROGRAM

An even better option would be using this fund to help the poor build savings. Even a small emergency savings cushion has huge benefits for those who struggle to make ends meet households with $500 or less in liquid savings in their bank accounts are 2.6 times more likely to use payday loans than households with

$2,000 to $8,000 in the bank. However, government-incentivized savings programs, such as RRSPs and TFSAs, overwhelmingly benefit already financially comfortable families. Gambling profits could be used to reward saving by matching low-income households’ contributions to designated savings accounts. This could involve a simple top-up following the RESP model. Alternatively, in a more ambitious program, participants could receive, say, $3 in matching credits for every $1 they saved over a year, up to a total of

$4,000 ($1,000 deposited by participants plus $3,000 in matching credits available at cash-out at the end of the year).

WORK WITH FINANCIAL INSTITUTIONS TO OFFER PRIZE-LINKED SAVINGS PRODUCTS

Another option would be using gambling profits to fund a prize-linked savings (PLS) program. Savers would buy lottery bonds from the government or deposit their money in a PLS account at a financial institution. The money normally contributed to each participating savings account (or earned on each bond) as fixed interest would be pooled into a single prize fund; instead of earning regular interest, every participating saver has a chance to win. PLS products are popular in other jurisdictions—almost a third of the United Kingdom’s population has money invested in Premium Bonds, for example—and are particularly appealing to low-income savers and lottery players.

USE THE OLG’S MARKETING BUDGET TO INCREASE FUNDING FOR PROBLEM-GAMBLING RESEARCH, PREVENTION, AND TREATMENT

Finally, to help gamblers struggling with addiction, Ontario should reduce advertising spending and put the money towards problem-gambling research, prevention, and treatment. "For gambling run by OLG, this would be a straightforward matter of slashing OLG’s marketing budget." (“ON360 Transition Briefings 2022

- Ontario 360”) In 2018 (the last year in which this information was published), OLG spent $282 million on marketing and promotion but only $64 million on problem-gambling prevention and treatment: $45 million was directed to the Ministry of Health and Long-Term Care, as per a policy that earmarks two percent of gross slot-machine revenue for problem gambling, and $19 million was devoted to its own Responsible Gambling program. In other words, OLG has been spending four and a half times more encouraging people to gamble than it has fighting gambling addiction. These figures should at the very least be balanced, if not reversed. For private operators regulated by iGaming Ontario, the government could consider a policy requiring that online gambling and sports betting providers contribute a certain amount to the Ministry of Health for every dollar spent on advertising in Ontario. Ideally, the ratio would be one-to-one: not only would this improve problem-gambling treatment resources, but it would also double the cost of marketing, a valuable check on the aggressive promotion of gambling in Ontario. (“ON360 Transition Briefings 2022 - Ontario 360”)

Source:           https://www.cardus.ca/news/media-coverage/turning-aces-into-assets- the-case-for-gambling-reform-in-ontario-1/. Accessed on 26 March 2023

Annex 3: Gazette Notice No. 8753 of 8 September 2017 – Delineation of Gambling Functions between the National Government and the County Governments

THE CONSTITUTION OF KENYA

THE INTERGOVERNMENTAL RELATIONS ACT (NO. 2 OF 2012)

DELINEATION OF FUNCTIONS

BETTING, CASINOS, AND OTHER FORMS OF GAMBLING

IT IS notified for the general information of the public that the Intergovernmental Relations Technical Committee has approved the delineation of the functions relating to betting, casinos, and other forms of gambling between the National and county governments in the manner set out in the Schedule.

Schedule

KAREGA MUTAHI,

Chairman, Intergovernmental Relations Technical Committee.