Lottery Ticket Sales Likely to Be Suspended From 1 June

• Minister of Trade Parks Tau says he will announce the winner of the eight-year lottery licence “on or before 28 May”.
• With Ithuba’s licence expiring on 31 May, lottery ticket sales will likely be suspended.
• Licence bidder Wina Njalo is proceeding with court action, accusing Tau of “frustrating” the licence process to favor Ithuba.

Just weeks after issuing a temporary lottery operator licence tender, the minister responsible for the lottery has backtracked and now says he will announce who will run South Africa’s lottery and sports pools for the next eight years “on or before Wednesday, 28 May 2025.”

Minister of Trade, Industry and Commerce Parks Tau announced his decision via a notice published on the virtual data room platform, a closed platform used to communicate with approved bidders. The details of his decision, which have not been made public, were shared on the platform last Wednesday.

The licence of Ithuba, the incumbent, expires on 31 May, and the tender for a temporary operator to run the lottery for 12 months from 1 June falls away.

In his notice, Tau said he intends “to announce the identity of the successful applicant after negotiations regarding the licence have been concluded to my satisfaction”.

He also referred the bidders to a clause in the Request for Proposal (RFP): “Should negotiations on the final terms of the licence fail to be concluded to the satisfaction of the minister, the minister reserves the right to negotiate with the next ranking applicant unless there are objective grounds for the minister to negotiate with another applicant.”

Late last month, Tau extended the bid adjudication period by a year but was silent on what would happen to ticket sales after Ithuba’s licence expired.

It is now likely that the sale of lottery tickets will be suspended from midnight on 31 May, when Ithuba’s licence expires.

Unless Ithuba is awarded the licence again, which would unleash a wave of litigation by losing bidders, “it appears likely that the lottery will be suspended while the winner sets up the hardware and software it will need to operate the lottery”, one of the bidders told GroundUp.

“It takes six months to transition between operators. The new operator runs parallel to the old one. There is a lead time to manufacture the machines [lottery ticket sales equipment],” he said. “You also need to have data centres etcetera set up so that when the switchover to the new operator happens, you are ready.”

But the National Lotteries Commission (NLC) will be able to continue allocating grants to worthy causes and covering its overheads from its R4.3-billion reserve fund, Commissioner Jodi Scholtz told Parliament recently.

Ithuba was originally awarded the eight-year licence, valued at between R60-billion and R65-billion over the life of the licence, in June 2015. It was extended for 24 months by the minister at the time, Ebrahim Patel, just before it was due to expire on 31 May 2023, after the NLC argued that Covid had affected Ithuba’s earnings.

In terms of the Lotteries Act, the minister is only able to extend a licence for a non-renewable period of 24 months, and the temporary licence appeared to have been a workaround.

Court action to proceed

Tau’s communication came just a day after one of the bidding consortiums, Wina Njalo, an initiative of the HCI Foundation, launched an urgent court application in the high court in Pretoria on 24 March to force the minister to award the fourth licence.

Wina Njalo is seeking an order directing Tau to announce the successful bidder before 9 May and to negotiate and conclude the licence agreement no later than 31 May.

Despite Tau’s about-turn, Wina Njalo still plans to proceed with its application, according to a well-informed source who asked not to be identified.

Wina Njola declined to comment.

In its application, Wina Njalo accused Tau of “frustrating” the awarding of the fourth national lottery licence in order to advance the interests of Ithuba.

Wina Njalo also asked the Pretoria High Court to issue an order declaring unconstitutional and unlawful the request for proposals for the temporary licence. The matter is due to be heard on 22 April.

The minister’s decision to appoint a permanent lottery operator rather than issue a temporary licence did not address the issues raised in Wina Njalo’s application, the source told GroundUp.

In his founding affidavit, Wina Njalo CEO Dawid Muller said, “The stark discrepancy between the slow moving fourth national lottery licence process and the extremely expedited novel temporary licence process in respect of the same bidders, confirms that the further delay in awarding the fourth licence and any award of a temporary licence is irrational, unreasonable and for ulterior purpose or otherwise unconstitutional.”

Muller also submitted that the minister’s “alleged concerns” over the fourth licence bidding and evaluation process were baseless, because the temporary licence was confined to the approved bidders for the fourth licence.

He questioned how the minister was able to make an “expedited decision” in one process but not in the other.

“The approach is so entirely irrational that it can give rise to only one conclusion: that the Minister is actuated by an ulterior purpose and is acting in a manner which will advance the interest of one party – Ithuba.”

When he postponed his decision in December last year, Tau hinted at possible problems, including the political connections of some members of bidding consortiums.

“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.”

A source close to one of the consortiums bidding for the licence told GroundUp: “If he can make a decision and does so before 31 May, there was no need for extension of the bid validity for one year, and that whole effort was just plain cock and bull.

“He has completely [messed] up this process. It was such a simple thing to do – just follow the recommendations of NLC, which he has had since October last year.”

A source close to a different consortium told GroundUp before Tau’s latest decision that they would not apply for the temporary licence to run the national lottery for a year when the current licence expires on 31 May.

“Only Ithuba could run the lottery from 1 June, and the high cost involved in running the temporary licence means it makes no sense for us to bid for just a year. We have already spent between R15-million to R20-million on our bid, and that is what we will concentrate on,” he said.

Another source involved with one of the bidding consortiums also questioned the time Tau has taken to decide on the fourth lottery licence.

The RFP for the second licence took ten months from bid submission to licence signature, while the third licence took 11 months, the source told GroundUp.

“In the case of the third licence, [former] minister [Rob] Davies, like the current situation, requested further evaluations and investigations for matters similar to what the minister vaguely suggested in his December 2024 media release.

“In fact, Minister Davies received the Adjudication Report on 11 August 2014 and engaged with the Preferred and Reserve Applicants on 23 October 2014 – just 2 months and 11 days later.

“For the fourth licence, the RFP was announced in August 2023, with a submission deadline of 3 February 2024. Now, since receiving the proposals, 14 months have passed without an announcement or a signed licence, even though this RFP process was already delayed by two years,” the source said.

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