Interior Cabinet Secretary Fred Matiang’i say the licences of most betting firms will not be renewed once the ongoing vetting is completed.
Dr Matiang'i said on Saturday that he had already received a status report from the Betting Control And Licencing Board and was reviewing it.
He explained that most of the firms had not been paying taxes.
“They must all comply with the law,” he said.
The minister regretted that youths are not productive as they spend most of their time "in bed betting".
Dr Matiang'i also noted that suicide cases have increased across Kenya due to the effects of gambling.
“We cannot be a gambling nation. We must live an honest life. Many youths end up frustrated when they fail in gambling and end up committing suicide," he said at Mekonge SDA Church in Kitutu Chache North, Kisii County, where he attended a service. "Here in Kisii, the number of cases is worryingly high."
He said it is time for Kenyans to tell each other the truth - that betting does not benefit the economy.
Proprietors within the multi-billion shilling betting and gambling industry have until July 1 to remit what they owe the government in form of taxes.
The government wants to reintroduce radical regulatory changes in the sector, which Matiang'i noted will "destroy the country's moral fabric if left uncontrolled".
The CS toured Kisii accompanied by Governor James Ongwae, Deputy Governor Joash Maangi, MPs Jimmy Angwenyi (Kitutu Chache North) and Richard Onyonka (Kitutu Chache South) and a dozen members of the Kisii assembly.