The High Court concluded that LottoStar was competing illegally with the official lottery by offering fixed-odds bets
Mpumalanga South Africa‘s high court has determined that LottoStar breached Section 57 of the Lotteries Act which forbids anybody from participating in, facilitating, or benefitting from any lottery that has not been authorised. The company was ruled out to have unlawfully profited off South Africa’s National Lottery.
The court determined that LottoStar violated an Act, which says that anybody managing a system that directly or indirectly enables wagering on the outcome of a lottery is guilty of an offense under the act’s provisions and prohibited them from taking bets on the results of any lottery drawings.
This act was hailed by the National Lotteries Commission (NLC) as one which affirms its duty to provide an environment “for safe and sustainable lotteries where the interests of participants are protected”.
The National Lottery Corporation (NLC) and Ithuba Holdings, the country’s lottery operator, sued LottoStar. As Ithuba put it, making bets on the result of lottery drawings through LottoStar is virtually identical to playing the national lottery. However, unlike Ithuba, LottoStar does not have to contribute to the National Lottery Distribution Trust Fund. Taxes on LottoStar’s ticket sales earnings are limited to 1.5%.
A little over a quarter of the money raised by the national lottery goes to the fund and is provided to non-profits. This, according to Ithuba, enables LottoStar to “offer higher prize payouts and more regular prizes to players”, giving them an edge over the official lottery.
LottoStar contended that if LottoStar’s operations were to be all declared illegal, it would have a direct and significant impact on all bookies licensed under the Provincial Gambling Act. As with other parties in a similar circumstance, it was deemed unnecessary by the court.
“Surely, it is quite evident that the relief formulated in a manner that if this court were to grant an order in favour of Ithuba, that order cannot be enforced against a party conducting similar business elsewhere in this province, let alone in all other provinces.”
LottoStar does not dispute that it makes fixed-odds wagers on the results of lotteries, but it does not think that doing so violates the Lotteries Act, according to the ruling. They claim that the bookmaker’s licence permits them to participate in this kind of business.
These arguments were argued to be unconstitutional by the court because the constitution does not grant a province legislature concurrent jurisdiction over lotteries.
“If the provincial legislature lacks the competency to allow the conduct of LottoStar, it is inconceivable that LottoStar can claim to derive power to engage in those activities from a source that naturally does not have it. This matter demonstrates how justice is often delayed when meritless preliminary defences are raised in circumstances where no real defense to the merits lie.”
The high court decision required LottoStar to cease collecting fixed-odds wagers on National Lottery games from citizens of the province immediately. Gaming companies must also pay for legal fees involved with the long-running case, in addition to their own. According to LottoStar, it would appeal the judgment to South Africa’s Supreme Court of Appeal.
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