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As Ethiopia looks to fund its record budget, the country has taken steps to increase its tax revenue by raising taxes on gambling winnings and strengthening turnover-based levies on operators through Proclamation No. 1395/2025.
Under the new reform, the tax on winnings from various games of chance, such as lotteries, prize draws, and sports betting, will rise from approximately 15% to a range of 20 to 25% of the total prize amount.
Licensed operators will still be responsible for a turnover tax of arond 15% based on their total sales or stakes, while also adhering to existing compliance and reporting obligations.
Analysts Warn of Potential Drawbacks
While the Ministry of Revenue views the tax changes as part of a larger strategy to enhance domestic revenue collection, analysts express concerns about the implications of these higher rates.
These experts warn that the increased tax rates could lead to lower net payouts and fewer promotional offers, potentially pushing away casual players, especially those from low and middle-income backgrounds. Although high-frequency bettors with more disposable income may continue to engage in online gaming, they might do so with smaller stakes.
Smaller and mid-sized businesses in the industry are particularly vulnerable to the combined burden of turnover taxes, withholding requirements, and compliance costs.
Furthermore, analysts caution that the tax hike might drive customers toward unlicensed or offshore platforms, where they could find better returns, undermining the government’s revenue goals.
Comparing Ethiopia to other African markets, Kenya taxes betting winnings at 20%, while South Africa applies varying rates between 6 and 15% depending on the province, plus a levy on gross gaming revenue.
Ethiopia’s Youth Population Offers Promise
While concerns remain, Ethiopia’s youthful population stands out as a significant advantage for economic growth. With over 41% of the population under the age of 15 and 28% aged between 15 and 29, the market shows immense potential for expansion, especially in the gaming sector.
As Africa’s gaming industry is projected to grow rapidly, from $2.16 billion in 2024 to $10.81 billion by 2033, Ethiopia, with its roughly 134 million residents, is set to play a crucial role in this growth.
The recent increase in mobile and internet access further enhances the opportunities for engaging this young demographic in online gaming. Although the government paused new license issuances to refine its regulatory framework, new licenses are expected soon.
Recent suspensions of over 80 licenses highlight a commitment to stricter oversight, promoting a safer gaming environment. The Ministry of Revenue will also release guidelines on withholding procedures to further shape the industry.
Source: FocusNGN
