South Africa’s Lottery faces nine-month shutdown
The South Africa National Lottery could be shuttered for nine months despite the government selecting a successful bidder for the new eight-year licence.
Trade and Industry Minister Parks Tau named Siyakhaya Holdings as the new operator on Wednesday 28 May. The licence covers the National Lottery and Sports Pools. The announcement arrived just days before the current licence, held by Ithuba Holdings, expires on 1 June.
Eight companies competed for the R180 billion ($10.0bn/€8.9bn/£7.5bn) contract.
Litigation has already commenced over this fourth National Lottery and Sports Pools licence award. Critics have also questioned Siyakhaya’s links to businessman Sandile Zungu, a prominent member of the governing African National Congress (ANC).
Gauteng-based Sizekhaya is led by a consortium that includes tycoon Moses Tembe and Zungu. Sizekhaya is part-owned by betting company, Goldrush Holdings.
Court to decide on temporary South Africa National Lottery licence
The immediate concern is the state of lottery operations from 1 June, when Ithuba’s licence expires.
Minister Tau tried to issue a one-year temporary licence. However, Wina Njalo, one of the unsuccessful bidders, challenged this in court. The Gauteng High Court ruled the temporary licence period could not exceed five months.
Ithuba is considered the only business that can operate the South Africa National Lottery at such short notice. However, the group has already said that a licence period restricted to just five months would be financially unfeasible.
The DTIC and the National Lotteries Commission (NLC) plan to contest the ruling in court today, Thursday 29 May. They fear a gap in operations until Siyakhaya can begin.
NLC chairperson Barney Pityana warned of serious consequences in an affidavit. “If the court does not come to its assistance and extend the suspension period, there will be no lottery operations for at least nine months, from 1 June 2025,” he wrote.
He added that the suspension could cost R1.8 billion in good cause funding.
In the initial hearing, Judge Sulet Potterill ruled that the temporary licence favoured Ithuba and was therefore unconstitutional.
Wina Njalo’s complaint included the minister’s failure to explain delays. The judge agreed. She said the minister had not fulfilled his constitutional duty to provide reasons.
Tau responded that he intended to announce the new provider by 28 May.
Who are Sizekhaya Holdings?
Sizekhaya says it is setting up its structures and putting in place the necessary infrastructure after its confirmation.
It explained that a variety of shareholders and a management team with business, gaming, and operational experience form its consortium. JSE-listed Goldrush owns 50% of Sizekhaya, while Bellamont Gaming and Zungu hold additional shares.
Sizekhaya also confirmed that it will use Chinese supplier Genlot as its technology partner.
Tembe said: “South Africa has hit the jackpot with Sizekhaya. Our vast experience in gaming in the country along with the brains trust we have assembled driven by the collective vision of creating a more enhanced national lottery for good causes, will grow the lottery so more good causes benefit.
“Our choice of technical partner was deliberate as well as we were determined to minimise the amount of foreign exchange that leaves the country.”
Ithuba and political rivals oppose decision
Ithuba, which has run the National Lottery since 2015, may take legal action following the decision.
“We are expectably deeply disappointed by the recent decision made by the Minister of DTIC and the NLC. We believe that this decision undermines the principles of localisation and inclusive economic growth set out in the Request for Proposal,” Ithuba said in a statement.
“Our game portfolio is locally developed, our operational model prioritises economic inclusion, and our reach extends across urban and rural communities, ensuring accessibility for all South Africans from day one.”
The decision disregards the efforts to build a homegrown lottery ecosystem that supports small businesses and job creation and channels maximum revenue to good causes, Ithuba added.
The ANC’s political rivals have also slammed the decision, alleging cronyism.
The Economic Freedom Fighters (EFF) said in a statement: “Instead of ensuring fairness, transparency and compliance with the Lotteries Act, [Minister Tau] has compromised a public asset, by awarding a contract worth over R180 billion over the next eight years to benefit the ANC’s cronies in a clear case of state capture.”
Minister defends process
Trade and Industry Minister Tau responded to the widespread criticism in a statement that announced Siyakhaya as the successful bid.
“It is most unfortunate that this matter has already become the subject of litigation and a judgment of the High Court,” Tau said.
“I am seeking legal advice with a view to appealing against the judgment’s findings and orders, and I reserve all my rights concerning this judgment. With due respect to the Honourable High Court, my announcement is the result of my undertaking made to the bidders and the Court before the hearing of the application.
“I look forward to the growth of the lottery and the sports pools under the stewardship of Sizekhaya and to a mutually beneficial and healthy working relationship between the DTIC, the NLC and Sizekhaya. I also look forward to increased contributions to the many needy beneficiaries of the National Lottery Distribution Trust Fund.”