Announcement of New Lottery Licence Operator Postponed – Again

It is possible the sale of Lottery tickets may have to be suspended while the tender for the new Lottery operator is finalised.

Parks Tau, the trade and industry minister, has postponed naming a winning bidder to run South Africa’s lottery when the tenure of current operator, Ithuba, ends in May next year.

Ithuba’s licence was due to have expired in May 2023 but was extended for two years by Tau’s predecessor Ebrahim Patel after a request by the then newly-appointed board of the National Lotteries Commission (NLC).

The Board, which was dealing with the corruption that had overwhelmed the NLC, also advised Patel of representations by Ithuba that it had been severely affected by the Covid pandemic. This included a ban on the sale of lottery tickets at the height of the pandemic.

In terms of the extension, Ithuba had to make contributions to the NLC for distribution to good causes at a higher rate than provided for in their initial licence.

New licence operators are given six months to set up infrastructure, including ticket machines countrywide, to take over from the previous operator before the incumbent’s licence ends. This latest postponement means that there will not be sufficient time for a smooth transition and It is unlikely that Tau will extend Ithuba’s licence again.

The process of appointing a new licence operator has also been plagued by allegations of conflict of interest and other issues.

GroundUp has learned that the NLC has contingency plans in place to continue funding good causes for up to a year if the lottery and the sale of lottery tickets are suspended.

The contingency also covers funding in the event of litigation by losing bidders when a new operator is finally announced, which could also derail the smooth running of the lottery.

In case ticket sales are stopped, the NLC will use its reserves of R3.9-billion to continue funding qualifying organisations, a source with knowledge of the contingency plan told GroundUp.

In his weekend statement announcing the postponement, Tau said: “Unfortunately, I am not in a position to make a final decision at this stage. Any such decision at this time would in all good conscience mean that I have not applied my mind with due consideration of all the relevant factors.”

“I have identified matters that require further evaluation. It would be inappropriate to disclose these issues now and their disclosure could very well prejudice the proper adjudication of the awarding of the licence.”

Tau said he was awaiting advice on the best way to ensure the continuation of the lottery in the interim and the “development of a programme to finalise this process”.

This, he said, must be done after consultation with the National Treasury.”

Tau also hinted at the political makeup of the consortiums bidding for the licence as another possible reason for the postponement.

He said: “I must also ensure that the owners and managers of the successful applicants are, as the Act states, ‘fit and proper persons’. In addition, I must ensure that no political party or political office-bearer has any direct financial interest in the applicant or a shareholder of the applicant.”

Business Day reported previously that most of the companies shortlisted for the tender are politically exposed.

The Gold Rush consortium is led by high-profile businessperson Sandile Zungu, who challenged for the ANC KwaZulu-Natal chair position in 2022 before dropping out after he failed to garner enough support, the paper reported.

Another politically connected bidder is HCI, which is majority-owned by the South African Clothing and Textile Workers’ Union, an affiliate of Cosatu, which is in alliance with the ANC. CEO Johnny Copelyn donated to President Cyril Ramaphosa’s CR17 campaign for the ANC presidency.

Another shortlisted bidder, according to Business Day, is Thebe Investment Corporation, which was founded by ANC leaders in 1992. Thebe is half-owned by Batho Batho Trust. The trust has donated R60-million to the ANC since 2021, according to declarations made to the electoral commission.

Ithuba, the holder of the licence, is also in the running, as is Umbulelo Consortium, led by Afrirent Holdings; and Giya Games, according to Business Day.

Vivien Natasen consulted for Giya Games on its bid. GroundUp reported in 2022 that Natasen, through his company Neo Solutions, contributed R2-million towards the luxury mansion of the then-NLC chair Aflred Nevhutanda — while his company Neo Solutions had a contract with the NLC. Natasen told GroundUp at that time that Neo Solutions was “appointed through the NLC’s supply chain processes, as and when services are required”.

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