Gunmen in minibuses sped into the town on Sunday night, targeting hotels, a television hall, a police post and a bank.
The assault in Mpeketoni is the latest in a spate of gun and bomb attacks in recent months blamed on al-Shabaab that have hurt the country’s struggling tourist industry.
Kenya had said it would be on alert during the World Cup to ensure public showings of matches were kept safe.
“The attackers were so many and were all armed with guns. They entered the video hall where we were watching a World Cup match and shot indiscriminately at us,” Meshack Kimani said. “They targeted only men but I was lucky; I escaped by hiding behind the door.”
The incident could heighten fears in other African nations such as Nigeria, which is battling the Boko Haram Islamist insurgency, that bars and other venues hosting World Cup match screenings could be targeted for attacks.
Sunday’s assault is the worst in Kenya since last September when al-Shabaab gunmen attacked Nairobi’s Westgate shopping centre, killing 67 people.
After Westgate, al-Shabaab warned of more attacks, saying they were determined to drive Kenyan troops out of Somalia. Kenya, whose soldiers are deployed as part of an African peacekeeping force battling militants, says it won’t pull out.
The gunmen came into Mpeketoni in two minibuses similar to those used as public taxis and attacked their targets with guns and at least one explosive device. Witnesses said there were about 30 gunmen.
A police officer said all the victims were men, with no women or children killed.
“After they attacked the area, they went round the town in the vehicles shooting in the air and chanting slogans in the Somali language,” said Issah Birido, 28, who survived by climbing a tree, hidden by the darkness.
He said about ten people were killed at the World Cup screening by attackers who arrived at about 9pm, between showings of two matches.
Interior minister Joseph Ole Lenku said the security forces would find the perpetrators, whom he called “bandits” and “criminals”, making no reference to al-Shabaab.
In an apparent swipe at political opponents, he said the government was cautioning “political leaders … to desist from destructive politics and ethnic profiling that may be responsible for this heinous act”. He did not elaborate.
Police said no arrests had yet been made and said an investigation was under way.
Mwenda Njoka, spokesman for Kenya’s internal security, told a Kenyan television channel: “Right now it is still premature to say who is behind the attack until investigations are done, but the initial suspicion is al-Shabaab.”