Ethiopia has recently passed Announcement No. 1395/2025, officially increasing the tax on gambling profits and strengthening the turnover-based taxation measures for operators, aimed at further increasing national revenue. This initiative covers various types of gambling games including lotteries, raffles, and sports betting, raising the prize tax rate from about 15% to 20%-25%, while licensed operators are still required to pay about 15% business tax on total sales or betting amounts, and comply with existing compliance and reporting requirements.
The Tax Department noted that these reforms are part of strengthening domestic tax collection, and the National Lottery Administration also stated that taxation and licensing help protect the public from gambling-related risks.
However, analysts warn that higher tax rates may reduce participation among casual players, especially those in lower-income groups. High-frequency bettors might continue to participate, but the amount of their bets might decrease. Additionally, the increase in business tax, withholding tax, and compliance costs will put significant pressure on small and medium-sized operators and may prompt some players to turn to unlicensed or offshore platforms, thus affecting revenue targets.
In other African gambling markets, Kenya taxes winnings at 20% and operator income at 15%; South Africa taxes winnings at 6% to 15% depending on the province, while also levying a total revenue tax on gambling.
As this policy is introduced, the African gaming industry is maintaining a rapid growth momentum. By 2033, the African gaming market is expected to grow from $2.16 billion in 2024 to $10.81 billion, with an annual compound growth rate of nearly 20%. With a population of about 134 million, half of whom are under the age of 20, and the widespread use of mobile devices and the internet, Ethiopia is expected to become a significant driver of growth in the African gaming industry.
The Tax Department plans to release detailed guidelines on withholding tax procedures in the coming months to guide operators in complying with the new tax requirements.
