The High Court of Kenya has partially lifted a stay order that had halted gambling regulations following a legal dispute. This ruling allows the majority of the gambling regulations to be enforceable again, although increased licensing fees and capital requirements remain on hold.
The stay order, issued by Justice William Musyoka in July 2023, came after a legal challenge from Thomas Buckley Opar Owuor and Ken Brance against the Gambling Control (Licensing) Regulations 2026. This order effectively paused most operations of Kenya’s licensed gambling sector, making the new regulations applicable only to authorized entities.
On Friday, September 15, 2023, Justice Musyoka responded to requests from the government and the newly established Gambling Regulatory Authority (GRA) by lifting the stay on all but the most contentious aspects of the regulations. The GRA argued that the blanket stay created a “regulatory vacuum,” allowing unlicensed operators to function without any oversight.
With the court’s decision, the GRA is now able to resume essential regulatory activities, which include the processing of license applications, due diligence on operators, and oversight for anti-money laundering and consumer protection.
However, the comprehensive judicial review regarding the suspended provisions will continue, with written submissions due by September 21, 2023, and a full ruling set for October 2, 2023.
Key aspects that remain suspended are the increased licensing fees and the gambling capital requirements for licensees. David Sarinke, a partner at Kenyan law firm McKay Advocates, noted that while scrutiny exists around the heightened fees, the ruling allows the licensing process to move forward. He pointed out that the court did not clarify which licensing fees are to be applied amid the suspension of the increased charges.
"It’s reasonable to revert to the previous fees as the court makes a determination on this issue," Sarinke said. He anticipates that the GRA will issue guidance reflecting the fees that applied before the recent regulation changes.
Contrary to Sarinke’s view, Steve Kipruto David, founder of KDS Advocates, believes that simply returning to the old fee structure may not be straightforward. He argues that the government is likely to stick with the new fees, partly due to a focus on stricter compliance and managing larger operations.
"I doubt it; these fees are exorbitant, but they are aiming for big players in the market. I don’t think they will review them downward," Kipruto stated. He pointed out that with over 150 licensed firms currently, many may struggle to meet the new capital requirements, threatening economic stability.
Kenya's move to a new regulatory framework for gambling, aimed at updating legislation from 1966, included replacing the former Betting Control and Licensing Board (BCLB) with the GRA. This overhaul introduced dramatic increases in licensing fees, with application costs for an online bookmaker license escalating to Ksh5 million, and a Ksh50 million license fee for online operations over a three-year period.
The increase in fees, described as ranging from 200% to 49,900%, has caused unrest among operators, many of whom worry about their ability to stay afloat under the new mandates. Concerns included potential job losses, a decrease in investments, and lower government tax revenues.
The ongoing legal case questions the constitutionality of the increased capital requirements, which some believe exceed amounts discussed during public consultations required under Article 10 of Kenya's 2010 Constitution, which emphasizes public participation.
Despite these claims, Sarinke noted that the government had submitted substantial documentation indicating proper stakeholder engagement during the regulatory development process. Kipruto expressed skepticism over the effectiveness of the public participation argument, believing the central issue will likely revolve around the burdensome fees.
He emphasized that operators struggling to meet capital requirements should be granted more time to raise their funds. "They should receive an extended period," he recommended, suggesting a possible two-year extension to comply.
