Tax Policy and Financial Performance of Gambling and Lottery Firms in Kenya
Year: 2026
Type: article
Abstract: Purpose of Study: This study examined the effect of tax policy on the financial performance of gambling and lottery firms in Kenya, focusing on corporate tax, withholding tax, excise tax on betting activities, and the moderating role of firm size. It sought to establish how these tax instruments influence firm profitability and sustainability. Methodology: The study adopted a positivist philosophy and exploratory research design. A sample of 64 firms was selected from 175 gambling firms using Yamane formula. Data for 2018–2022 were obtained from audited financial statements, Betting Control and Licensing Board publications, and Kenya Revenue Authority records. Regression analysis was conducted in STATA. Findings: The findings showed that corporate tax policy had a statistically significant negative effect on financial performance (β = -0.2847, p = 0.012). Withholding tax policy also had a significant negative effect (β = -0.1933, p = 0.014), while excise tax policy significantly reduced financial performance (β = -0.2419, p = 0.008). The direct-effects model explained 42.11% of variation in financial performance. Firm size significantly moderated the relationship between taxation policy and financial performance (β = 0.1036, p = 0.004), with the interaction model increasing R-squared to 51.89%. Larger firms were better positioned to absorb tax-related financial pressures than smaller firms. Conclusion: The study concludes that corporate, withholding, and excise tax policies exert significant negative effects on the financial performance of gambling firms in Kenya. Firm size moderates these effects, reducing the burden on larger firms. The study recommends rationalising tax rates, simplifying withholding-tax procedures, and size-sensitive relief to support sustainability.
Institution: Kenyatta University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7212189381
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