Automated Summary
Key Facts
The Petitioners, representing the Association of Gaming Operators of Kenya, challenged the constitutionality of the Nairobi City County Betting, Lotteries and Gaming Act, 2021. The court declared the Act unconstitutional and void due to insufficient public participation during its enactment, violating Articles 10, 174(c), 196, and 201(a) of the Constitution. Key issues included the legality of section 32(1) imposing a 10% entertainment tax on gross winnings and non-compliance with delineated functions from the Consolidated Petitions and Gazette Notice 8753 of 2017.
Tax Type
Entertainment tax on gross winnings of betting, lotteries, and gaming activities under the Nairobi City County Betting, Lotteries and Gaming Act, 2021.
Issues
- Whether Article 209(3)(b) of the Constitution permits a County Government to levy taxes on the gross winnings of all betting, lotteries, and gaming activities as entertainment tax. The Court declined to address this issue, as the Act was already void for constitutional non-compliance, rendering further analysis premature and potentially usurping legislative authority.
- Whether the Nairobi City County Betting, Lotteries and Gaming Act, 2021, violated Articles 10, 174(c), 196, and 201(a) of the Constitution due to inadequate public participation and stakeholder consultations. The Court found that the Act failed to meet constitutional standards for meaningful public engagement, as the single newspaper advertisement was insufficient and superficial compared to the National Assembly's broader efforts.
- Whether the Petition has attained the precision threshold as required by constitutional practice, ensuring clear identification of violations and their impact. The Court determined that the Petition sufficiently met this threshold by specifying constitutional provisions, the manner of infringement, and the nature of injury suffered by the petitioners.
Holdings
- The Court found the enactment process of the Act lacked reasonable public participation, with a single newspaper advertisement in low-circulation media during a lockdown failing to meet constitutional standards. This superficial engagement violated the principles of devolution and public participation under the Constitution.
- The Court declined to address whether Article 209(3)(b) permits county governments to levy entertainment taxes on gross winnings of betting and gaming activities, as the impugned Act had already been invalidated for constitutional non-compliance.
- The Court declared the Nairobi City County Betting, Lotteries and Gaming Act, 2021 unconstitutional and void for violating Articles 10, 174(c), 196, 201(a) of the Constitution and Section 87 of the County Governments Act due to insufficient public participation and stakeholder consultations during its enactment. The Act was quashed as it failed to meet constitutional requirements for meaningful public engagement.
Remedies
- The court ordered that there would be no costs awarded to either party, as the petition was determined to be public interest litigation.
- The court issued a declaration that the Nairobi City County Betting, Lotteries and Gaming Act, 2021 is unconstitutional, null and void, and of no legal effect for violating Articles 10, 174(c), 196, 201(a) of the Constitution and Section 87 of the County Governments Act due to insufficient public participation and stakeholder consultations.
Tax Issue Category
Other
Legal Principles
The court emphasized that public participation is a constitutional principle under Articles 10 and 174(c) of the Kenyan Constitution, requiring meaningful and non-illusory engagement. It held that failure to meet the 'reasonable public participation' standard renders legislation void ab initio. The judgment also outlined a nine-point framework for evaluating public participation, including clarity of subject matter, inclusive representation, and transparency.
Precedent Name
- Legal Advice Centre & 2 Others v County Government of Mombasa & 4 Others (2018)
- British American Tobacco Kenya, PLC v Cabinet Secretary for the Ministry of Health & 2 Others; Kenya Tobacco Control Alliance & Another (Interested Parties); Mastermind Tobacco Kenya Limited (The Affected Party) [2019] eKLR
- Anarita Karimi Njeru v Republic (1979) KLR 154
- The Implementation of the Constitution v Parliament of Kenya & Another & 2 Others (2013) eKLR
- Doctors for Life International v Speaker of the National Assembly & Others
- Robert Gakuru & Others v Governor of Kiambu County & 3 Others (2014) eKLR
- CerealsGrowers Association & Another v County Government of Narok & 10 Others (2014)
- Fredricks & Others v MEC for Education, Eastern Cape & Others (2002) 23 ILJ 81 (CC)
- Communications Commission of Kenya & 5 Others v Royal Media Services Limited & 5 Others [2014] eKLR
Cited Statute
- Entertainment Tax Act
- Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, 2013
- Supreme Court Act
- Constitution of Kenya, 2010
- County Governments Act, No. 17 of 2012
- Fourth Schedule to the Constitution of Kenya, 2010
Judge Name
A.C. Mrima
Passage Text
- A Declaration hereby issue that the Nairobi City County Betting, Lotteries and Gaming Act, 2021 is in violation of Articles 10, 174(c), 196 and 201(a) and Section 87 of the County Governments Act for want of reasonable public participation and stakeholder consultations.
- Public participation must be real and not illusory. It is not a cosmetic or a public relations act. It is not a mere formality to be undertaken as a matter of course just to 'fulfill' a constitutional requirement.
- In the event this Court goes ahead to deal with the instant issue, then that will be tantamount to the Court acting in abstract and, dangerously so, usurping the role of the legislative arm of the Government. This Court must, as a call of duty, exercise restraint so as to accord the other entities to, in the first instance, deal with the matter.