South Africa lottery licence postponed again
The ongoing saga of the national lottery licence in South Africa continues to make headlines, as Minister of Industry, Trade and Competition Parks Tau announced a further delay.
The appointment of a new operator has been delayed by a further 12 months, thus pushing uncertainty over ticket sales and grant provision beyond May 2025. This is the third delay since July 2022, which has left consumers and recipients of lottery funding in limbo as to what lies ahead for the lottery.
Uncertainty over ticket sales after Ithuba’s licence ends
The current lottery operator, Ithuba, has a licence that will expire on 31 May 2025. However, the process of adjudication of bids has been extended to May 2026. While the Minister confirmed an extension of the “bid validity period,” he did not clarify the implications for ticket sales and operational activities after the lapse of Ithuba’s licence.
The licence is worth around R180 billion over five years and has been described as “a licence to print money.” There are significant implications to this delay, especially considering Ithuba is the sole company currently able to operate the lottery business. The government is now left with a dilemma: it can either extend Ithuba’s licence for another year, risking legal challenge from other bidders or halt ticket sales entirely.
Many of the stakeholders are stunned by the recurring delay. The first postponement occurred in July 2022 when a two-year extension was granted to Ithuba by then-Minister Ebrahim Patel. His prior assertion that the Lotteries Act permits a 24-month extension of a licence established the tone for future disruption in the South Africa lottery sector.
Financial implications of delays
The ramifications of these delays extend beyond just ticket sales; they also pose a significant risk to the financial support designated by the National Lotteries Commission (NLC) for various charitable initiatives. The NLC has devised contingency plans to guarantee that grant allocations may persist for a duration of up to 12 months, notwithstanding any interruptions in ticket sales. A reserve fund is ready to support these activities, but challenges persist.
In the last few years, the payouts by the National Lottery Commission (NLC) have taken a steep decline, from R1.36 billion (USD 69.4 million) for charitable causes in 2020 to R972.3 million (USD 49.6 million) in 2023. The commission has yet to publish its 2024 report; however, the trends point toward grant funding deficiencies being sure to persist, aggravated by anti-corruption measures and a shortage of personnel tasked with overseeing disbursements.
The NLC’s operating expenses have seen fluctuations, down to R469 million (USD 24 million) in 2023, after introducing significant cost-cutting interventions under the new administration. Taking these factors into account, there is an increasing risk that the NLC will face challenges in honouring its funding obligations if lottery ticket sales are halted, even for a short period.
Political tensions over the delay
The licensing process for the lottery has raised not just operational issues but also political ones regarding possible conflicts of interest. Minister Tau has said he wants to make sure that no political party has any financial interest in the bidding process. Yet critics say this delay could point to unresolved problems, especially as some bidders are believed to have connections to factions within the ruling African National Congress (ANC).
Mzwandile Masina, chairman of Parliament’s trade and industry committee, requested an investigation into the South Africa lottery licence process. Additionally, he has suggested consideration of a temporary licence or a state-owned lottery model if a decision is not made before Ithuba’s licence expires.
Opposition MPs have not been afraid to criticise Tau’s handling of the matter. Democratic Alliance MP Toby Chance has also implied that there could be a cause of delay in terms of conflicts of interest amongst bidders, which raises additional questions about the integrity of the process in general.
Amid the ongoing tumult, several stakeholders, among them bidder Wina Njalo (RF) Pty Ltd, have taken the government to court. They contend that Tau’s failure to act is unreasonable and self-serving, to the advantage of Ithuba. The firm argued that the failure to grant the new licence threatens the stability of the national lottery.
With billions of rand to be gained or lost and with political tensions running high, the future of South Africa’s national lottery remains uncertain. As the cut-off date draws near, stakeholders can only hold on to the hope for clarity and finality in a process that has turned into a complicated mess of legal, financial, and political considerations. The actions of Minister Tau and the NLC in the following steps will be critical in shaping the future of South African lottery operations.
