Eight betting companies have paid a total Sh4.7 billion in taxes over the past three years, Kenya Revenue Authority (KRA) boss John Njiraini has told the Labour and Social Welfare Committee of the National Assembly.
In the past two years alone, tax from betting firms has almost tripled from Sh1.2 billion to Sh3.4 billion.
Mr Njiraini led a team from the KRA to a meeting with the committee to discuss the Betting, Lotteries and Gaming Bill.
He said the agency is about to start implementing changes to the existing law on gambling.
He was, however, critical of the law for creating a complex system of taxation that would create opportunities for disputes.
The KRA is of the opinion that raising the tax on gambling could drive the practice underground and lead to illegal gaming.
"A similar effect has been seen in tobacco and alcohol. The best example would be the effect the tax rate has had on the (Senator) Keg brand of beer," said Mr Njiraini.
Consumption of the low-end brew dropped when the tax on it rose in 2014 and is seen to have contributed to the higher intake of illicit alcohol.
"High tax rates for commodities deemed to be socially unacceptable leads to reduced demand and growth of underground channels," said Mr Njiraini.
He, however, said introducing a tax on winnings and raising the levy on betting would be in line with the practice across Africa.
The second reading of the Bill is scheduled to continue on Tuesday afternoon.