Uncertainty Looms Over South Africa’s National Lottery as New Operator Decision Delayed

Current Operator Ithuba Nears Licence Expiry

Ithuba, the current National Lottery operator, was initially set to conclude its licence in May 2023 but received a two-year extension from the previous minister, Ebrahim Patel.

The extension followed a request by the National Lotteries Commission (NLC), which was addressing corruption allegations.

Ithuba had cited the economic effects of the COVID-19 pandemic, including a temporary ban on ticket sales, as justification for the extension.

As part of the extension, Ithuba increased its contributions to the NLC’s fund for good causes.

However, the ongoing delay in naming a new operator has raised concerns about a smooth transition, especially since new licence holders typically require six months to establish infrastructure and systems.

Allegations Cast Shadow on Licence Bidding Process

The bidding process for the next licence has been controversial, with allegations of political connections and conflicts of interest among the shortlisted bidders. Business Day reported that many contenders are politically exposed, including:

• Gold Rush Consortium: Led by businessman Sandile Zungu, who previously contested for the ANC KwaZulu-Natal chairmanship.
• HCI: Majority-owned by the South African Clothing and Textile Workers’ Union, with CEO Johnny Copelyn having donated to President Cyril Ramaphosa’s CR17 campaign.
• Thebe Investment Corporation: Founded by ANC leaders in 1992, Thebe has donated R60 million to the ANC since 2021 through Batho Batho Trust.
• Giya Games: Associated with consultant Vivien Natasen, who has faced allegations of questionable payments linked to the NLC.

Other bidders include the current operator Ithuba and the Umbulelo Consortium, led by Afrirent Holdings.

Contingency Plans to Sustain Funding

In light of potential disruptions, the NLC has contingency measures to maintain funding for good causes.

Reserves amounting to R3.9 billion will be used to support qualifying organizations for up to a year, even if ticket sales are halted or legal disputes arise from the bidding process.

Minister Tau Calls for Further Evaluation

Minister Tau emphasized the importance of a thorough evaluation before making a final decision, stating:

“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.”

He underlined the need to ensure that applicants are “fit and proper persons” and free from political influences, adding that the National Treasury’s advice will guide interim measures to continue the lottery.