New Announcement on Lottery License Operator Postponed Once More -

Parks Tau, the Minister of Trade and Industry, has postponed the announcement of the successful bidder for the operation of South Africa’s lottery, which is expected to change hands after Ithuba’s term ends in May of next year.

The original expiry date of Ithuba’s licence was May 2023; however, it was extended for an additional two years by Tau’s predecessor, Ebrahim Patel, following a request from the newly appointed board of the National Lotteries Commission (NLC).

See: Leaked report exposes misuse of lottery funds assigned to minstrel group

The board, responding to significant corruption issues within the NLC, also cited Ithuba’s assertions of considerable impacts from the Covid pandemic, including a suspension on lottery ticket sales during the height of the crisis.

With the licence extension, Ithuba must provide a higher percentage to the NLC for distribution to charitable causes than was initially outlined in its original licence.

New licence holders have six months to set up necessary infrastructure, such as ticket vending machines, nationwide before the current operator’s licence expires.

This recent delay indicates that a seamless transition may be challenging, and it seems unlikely that Tau will extend Ithuba’s licence again.

The process of appointing a new licence operator has also been complicated by allegations of potential conflicts of interest and additional issues.

Contingency plans

GroundUp has disclosed that the NLC has contingency strategies in place to support charitable initiatives for up to a year in the event of a halt in lottery operations and ticket sales.

The plans also include financial backing in case of legal challenges from unsuccessful bidders once a new operator is selected, which could potentially disrupt the operational continuity of the lottery.

If ticket sales are suspended, the NLC has allocated reserves totaling R3.9 billion to continue funding qualifying organizations, as reported by a source familiar with the contingency arrangements, according to GroundUp.

In a recent statement regarding the delay, Tau remarked, “Unfortunately, I am unable to make a definitive decision at this point in time.”

“Making such a decision now would imply that I have not adequately considered all relevant factors.”

“I have encountered issues that necessitate further examination. It would be inappropriate to disclose these concerns at this time, as their revelation could obstruct the fair adjudication of the licence award.”

See:
Minister initiates appointment of National Gambling Board members after a decade
Lottery fund freeze affects SATMA awards
Lottery spent R1.5 million on ‘lawfare’ in an effort to thwart Patel’s anti-corruption initiatives

Tau noted that he is awaiting advice on the best approach to ensure a smooth continuation of the lottery during this transitional period and the “creation of a plan to finalize this process.”

This, he stressed, “should be conducted after consultations with the National Treasury.”

Tau also indicated that the political affiliations of the consortiums competing for the licence might be another aspect contributing to the delay.

He stated, “I must ensure that the owners and managers of the successful bidders are, as specified by the Act, ‘fit and proper individuals’. Additionally, I need to confirm that no political party or political office-holder has any direct financial interest in the applicant or in any of its shareholders.”

According to Business Day, the majority of the companies nominated for the tender are politically affiliated.

The Gold Rush consortium is spearheaded by prominent entrepreneur Sandile Zungu, who pursued the ANC’s KwaZulu-Natal chair position in 2022 but withdrew after not securing sufficient support, as reported by the publication.

Another bidder with political connections is the JSE-listed Hosken Consolidated Investments (HCI), which is primarily owned by the South African Clothing and Textile Workers’ Union, aligning with the ANC.

HCI’s CEO Johnny Copelyn contributed to President Cyril Ramaphosa’s CR17 campaign for the ANC presidency.

Another firm on the shortlist is Thebe Investment Corporation, founded by ANC leaders in 1992. Thebe is partially owned by Batho Batho Trust, which has donated R60 million to the ANC since 2021, as per electoral commission records.

In addition to Ithuba, the current licence holder, other competitors include the Umbulelo Consortium, led by Afrirent Holdings, and Giya Games, as reported by Business Day.

Vivien Natasen served as a consultant for Giya Games regarding its proposal. GroundUp previously reported that Natasen, through his company Neo Solutions, contributed R2 million toward the luxury home of former NLC chair Alfred Nevhutanda while his company held a contract with the NLC.

Natasen maintained that Neo Solutions was “appointed through the NLC’s procurement processes as required for services.”

Stay informed with Moneyweb’s extensive finance and business news on WhatsApp here.