The High Court of Kenya has lifted a stay order that had paused the implementation of gambling regulations last month, allowing the majority of the new rules to take effect. However, increases in licensing fees and capital requirements remain suspended.
This stay order was originally issued by Justice William Musyoka in July 2023, in response to a legal challenge from Thomas Buckley Opar Owuor and Ken Brance against the Gambling Control (Licensing) Regulations 2026. The order effectively froze operations within Kenya’s licensed gambling sector, leaving only existing authorizations applicable.
On Friday, Justice Musyoka decided to partially lift the stay order at the request of the Kenyan government and the newly established Gambling Regulatory Authority (GRA), allowing other regulations to resume except for the controversial provisions regarding increased fees and capital requirements.
The GRA highlighted that the previous full stay order created a “regulatory vacuum” that permitted unlicensed operators to function without oversight. The recent ruling empowers the agency to resume regulatory activities, including processing license applications, conducting due diligence, and ensuring compliance with anti-money laundering regulations and consumer protections.
Despite this progress, the broader judicial review regarding the suspended provisions will still take place, with written submissions due by September 21, and a full judgment to be issued on October 2.
Among the regulations that remain on hold are the enhanced licensing fees and capital requirements. David Sarinke, a partner at McKay Advocates, noted that while the increased fees are under scrutiny, the ruling allows the licensing process to continue. He expressed anticipation that the regulator would revert to the previous licensing fees prior to the amendments, emphasizing that this would be a reasonable course of action.
In contrast, Steve Kipruto David, founder of KDS Advocates, argued against such a straightforward return to past fee structures, suggesting that the government is inclined towards imposing stricter compliance measures and favoring larger operators in the gambling sector.
"I doubt it," Kipruto said, referring to the reversion of fees. He opined that despite the increased costs being exorbitant, they are part of a larger strategy to regulate the industry. With over 150 licensed firms currently in Nigeria, he believes that significantly fewer will likely meet the new capital requirements.
Kenya's shift towards a new regulatory framework for gambling began last year as part of an overhaul of laws dating back to 1966. The previous Betting Control and Licensing Board (BCLB) has been replaced by the GRA, which introduced significant changes, including dramatically increased licensing fees. Previously, online gaming operators paid about Ksh10,000 ($77) for license applications and yearly fees ranging from approximately Ksh400,000 to Ksh1 million. Now, the application fee for online bookmakers has surged to Ksh5 million, with a yearly licensing fee of Ksh50 million, covering a three-year period instead of annual renewals.
The initial stay order request noted that licensing fees have spiked anywhere from 200% to nearly 50,000%, alongside a new Ksh100 million capital requirement specifically for online bookmakers and iGaming operators. Concerns have been raised about the ability of many operators to meet these heightened fees, with some potentially considering closure, which could threaten thousands of jobs and diminish government tax revenues.
On the issue of public participation, the legal challenge asserts that the increased capital requirements might violate constitutional standards since they exceed figures recommended during public consultations. Kenya’s 2010 Constitution recognizes public participation as a core governance principle. Nonetheless, Sarinke mentioned that the government produced substantial documentation supporting its engagement with stakeholders throughout the regulatory development process.
Kipruto expressed skepticism regarding the success of the public participation argument, stating that he views the exorbitant fees as the central issue. He believes that operators unable to meet the capital requirements should be given more time to comply, proposing that the moratorium should be extended to allow potentially two additional years for operators to raise necessary funds.
