South Africa’s National Lottery Faces Uncertainty Amid Legal Challenges: A Closer Look
The future of South Africa’s National Lottery hangs in the balance as legal disputes threaten to delay operations for up to nine months. Despite the recent selection of Siyakhaya Holdings as the new operator for the upcoming eight-year licence, complications surrounding a temporary licence could stall lottery activities significantly.
On May 28, Trade and Industry Minister Parks Tau announced that the contract, which encompasses both the National Lottery and Sports Pools, has been awarded to Siyakhaya Holdings, just days before the current licence held by Ithuba Holdings is set to expire on June 1. This announcement follows a competitive bidding process involving eight contenders for a contract valued at R180 billion (approximately $10 billion).
Litigation has quickly emerged following this decision. Questions have arisen regarding Siyakhaya’s connections to notable businessman Sandile Zungu, a figure within the African National Congress (ANC). The consortium behind Siyakhaya, which includes well-known tycoon Moses Tembe and is partially financed by Goldrush Holdings, adds to the controversy.
Legal Complications Surrounding the Temporary Licence
The crux of the issue lies in the operations of the lottery post-expiration of Ithuba’s licence. Minister Tau attempted to issue a one-year temporary licence, but this was challenged by Wina Njalo, a competitor in the bidding process. The Gauteng High Court has now ruled that the duration of this temporary licence can last no longer than five months, a timeline that Ithuba argues would render operations economically unviable.
The Department of Trade, Industry and Competition (DTIC) and the National Lotteries Commission (NLC) are set to appeal this ruling, fearing a potential gap in services until Siyakhaya can commence operations. NLC chair Barney Pityana expressed serious concerns in an affidavit, warning that without an extension, lottery operations could halt from June 1, leading to the loss of around R1.8 billion designated for social causes.
Judge Sulet Potterill previously stated that the temporary licence disproportionately benefitted Ithuba, marking it unconstitutional. Wina Njalo’s challenge highlighted a lack of transparency from the minister regarding delays in the process.
Who is Siyakhaya Holdings?
Siyakhaya has begun establishing the necessary framework for its operations following the award announcement. The consortium includes a diverse management team with experience in gaming and business, alongside equity participation from JSE-listed Goldrush and other stakeholders.
Tembe expressed optimism about the future of the National Lottery, emphasizing their commitment to maximizing local benefits while minimizing foreign exchange outflow through the selection of technology partners like Genlot.
Opposition from Ithuba and Political Rivals
Ithuba, which has overseen the lottery since 2015, is reportedly considering legal actions in response to the minister’s decision. The organization has voiced disappointment, arguing that the new contract undermines localization and inclusive economic growth principles.
The decision has also sparked criticism from the ANC’s political opposition, with parties like the Economic Freedom Fighters (EFF) accusing the government of cronyism and failing to adhere to transparency in the awarding process.
Minister Tau’s Response
In light of the backlash, Minister Tau has defended the selection process, noting the unfortunate emergence of litigation and signaling his intent to appeal the high court’s findings. He expressed hope that Siyakhaya’s leadership would promote growth within the lottery and create essential funding for public welfare initiatives.
As the legal landscape evolves, the fate of South Africa’s National Lottery remains uncertain, posing significant implications for the good causes it serves. The coming months will prove crucial in determining whether the new operator can take the reins in time or if operations will come to a standstill.