Back in August 2023, a law imposing a 10% withholding tax on any money won from sports betting became active in Ghana, drawing plenty of concerns from bettors in the country.
It’s hard enough to win bets, so why would the government want to take out part of the cash on the odd occasion when bettors are successful?
That was the general feeling amongst most punters.
That particular regulation has driven many Ghanaians to search for offshore betting sites that don’t have tax.
“Ghanaian punters are so upset with the tax ruling that many have written to us asking for betting sites that don’t tax their winnings,” said Leye Ayodele, editor at My Betting Sites Ghana, a leading sports betting affiliate company in the country. “Of course, we advised them against using offshore sites because it is illegal and unsafe, so they are effectively stuck with this taxation regime,” he continued.
The dissenting voices against that regulation have gone quiet a little bit, but it might be worth revisiting the tax situation and asking if it is the way to go.
And with the Ghanaian elections coming up in December 2024, some of the presidential candidates have touched on this particular tax, using it as one of their campaign agendas.
So the issue of betting taxes is sure to be on the radar once again sooner rather than later.
Former president and presidential candidate of the National Democratic Congress for the 2024 general elections, John Mahama, has hinted that reviewing betting taxes would be on his to-do list if he wins the elections. “It is not just about taxes on betting, when we come to government we will look at the number of taxes imposed,” said the presidential aspirant.
Let’s go back to 2023 and remind ourselves of why exactly this tax was introduced. With Ghana’s betting industry experiencing exponential growth within the last decade, the Ghanaian government saw an opportunity to generate more revenue for the country.
The 10% withholding tax on winnings was introduced, effectively replacing the previous 15% value-added tax on betting stakes.
In addition to the tax on winnings, Ghana also compelled betting operators to remit a 20% withholding tax on the Gross Gaming Revenue.
The Ghana Revenue Authority (GRA) had projected then that by the end of 2024, the country would have been able to pull GHS 1.2 billion in betting taxes. As of September 2023, about a month after the implementation of the new tax regime, the GRA announced that monthly betting taxes stood at GHS 15 million, projecting that the figure would be up to GHS 60 million by the end of the football season.
“During the first month of implementation, we averaged GH¢20 million for the GGR,” said Edward Gyambra of the Domestic Tax Revenue Division of the Ghana Revenue Authority. “As for the withholding tax, we’ve just started the betting season, but during the lean season, we averaged GH¢15 million.
We anticipate this to quadruple by May,” he added. While these figures look very attractive on paper, is this the best Ghana can do? Withholding tax on winnings appears limiting as it applies to successful bets. Statistically, less than 10% of all bets placed end up being successful.
So, in a way, the GRA is shortchanging itself by taxing just winnings.
Perhaps it’s time to go the Kenyan way and tax betting stakes as well.
Kenya taxes both betting stakes and winnings. The East African nation has a 7.5% excise tax on stakes and a 20% withholding tax on winnings. It is no coincidence that Kenya is one of the leading sub-Saharan African nations when it comes to betting tax revenue.
Given the large number of Ghanaians that place bets—about a third of the population—the country would arguably get more value from taxing betting stakes as against winnings. Even if Ghana charges just 5% on betting stakes, it can potentially yield more than the current 10% charge on winnings.
Also, the idea of taxing betting stakes would arguably be better received by bettors compared to taxing winnings. It is generally better to tax a bettor at the point of placing the bet since he or she is effectively giving away the money anyway and isn’t guaranteed to get anything in return. It would be a lot more painful if, after going through the research and emotional rollercoaster of placing and winning a bet, you are told to part with a certain percentage of the money.
