Over the past ten years, the betting sector in Ghana has experienced remarkable expansion, attracting numerous betting firms to establish a presence in the country. As part of the government’s strategy to enhance revenue generation for developmental purposes, a new measure has been implemented as of Tuesday, August 15, 2023.
This measure involves the introduction of a withholding tax set at 10% for both betting and lottery winnings. It’s important to note that this tax will not be applied to the initial amount invested in placing bets or participating in the games. Rather, it will solely be imposed on the profits derived from these activities.
This recent development follows the enactment of the Income Tax (Amendment) Act, of 2023 (Act 1094), which mandates the application of a withholding tax on all lottery winnings. This tax is to be deducted by lottery operators and subsequently remitted to the Ghana Revenue Authority (GRA).
In accordance with this legislation, the withholding tax deduction is applicable to payouts from various sources, including private lottery operators involved in sports betting, casino operations, route operations (such as slot machines), marketing promotions, national lotto betting, remote interactive game operators, and similar entities.
This is a move that has ignited fervent discussions across the nation as it promises to reshape the landscape of the gambling industry, while also raising pertinent questions about its economic, social, and regulatory implications. This article aims to dissect the multifaceted effects of Ghana’s proposed betting tax, offering insights into its potential impact on the economy, the gambling sector, and society at large.
It is imperative to note Ghana is not the first country to introduce taxes on betting. Several African countries have implemented betting taxes with varying degrees of success. In Kenya, a 20% tax on betting and gaming winnings has sparked debates over its impact on industry growth and responsible gambling, Nigeria has witnessed significant gambling industry growth, prompting discussions about refining tax structures for optimal revenue and responsible gambling promotion.
According to the Secretary of the Ghana Association of Sports Betting Operators (GHASBO), Dr. Kweku Ainuson, the betting industry is worth USD 100 billion and has significantly contributed to the growth of the world economy, including Ghana.
With the imposition of taxes, governments aim to generate additional revenue streams to fund public services and infrastructure development. While higher tax rates could enhance revenue generation, conversations that they also pose the risk of altering consumer behaviour, potentially leading to reduced participation and the emergence of unregulated platforms are being raised.
In a conversation with an economist, Professor Peter Quartey, he highlighted that the introduction of a tax on betting activities serves the purpose of augmenting the overall tax revenue. He emphasized the significance of acknowledging that economic activities should be subject to taxation. Professor Quartey also noted that Ghana’s Gross Domestic Product (GDP) is presently very low. Thus, the implementation of this new tax mechanism is anticipated to contribute positively by generating additional income that can be allocated toward government expenditures. This, in turn, holds the potential to diminish the nation’s reliance on borrowing.
The Coalition of Small Business Owners (CSBO) urged Finance Minister Ken Ofori-Atta to suspend the taxes imposed on lottery and sports betting companies and their customers. However, all pleas heeded no results as the Ghana Revenue Authority (GRA) on Monday, August 7, announced that it will begin implementing a 10% withholding tax on all gross gaming winnings from August 15, 2023.
The impact of betting can be positive and negative. While it may improve the economic fortunes of individuals who engage in it and governments who derive revenue, it can be addictive and breed corruption.
There is a prevailing sentiment that the introduction of the betting tax could prompt the youth to engage in more responsible betting practices. Advocates of this view suggest that the imposition of a tax on winnings might encourage young individuals to think twice before placing bets, potentially leading to a more cautious approach. However, not everyone shares this perspective. A seasoned sports bettor in the sports betting community, Hakim Richard, stands in contrast to this notion. He believes that the imposition of a tax might not necessarily deter impulsive behaviour, as the hope of potential winnings often overshadows financial considerations. “People may just stake higher,” he said.
Another bettor, John Amoah (not real name) expresses his reservations about the recent implementation of betting taxes. He shares that while betting has been a source of occasional winnings for him, the new taxes feel like an intrusion on his hard-earned profits. He believes that these taxes will make it more challenging to turn a profit, as betting is about calculated risks and careful analysis.
“I don’t think government is being fair and I think they have misplaced priorities. Why don’t they channel this energy into looking for jobs rather than taking the little we have decided to make for ourselves? Policymakers should consider the impact of how it is hard to get winnings and think of creating job opportunities for us. Extra taxes do not address the issue of unemployment,” Amoah said.
By: Deborah Dzifa Makafui