Troubling questions after Minister Tau gives Ithuba another year to run National Lottery

Daily Maverick

4 days ago

On the face of it, Ithuba should have been excluded, as it did not bid for the new permanent licence and it has reached the maximum legal operating limit of 10 years.
Minister Parks Tau has granted a controversial 12-month National Lottery extension as an 'emergency' temporary licence to Ithuba Holdings to run the National Lottery.
This extends Ithuba's operations to 11 years despite the legal limit being 10 years maximum.
Tau's decision comes despite two court judgments that found that the temporary licence tender process was unfair and favouring Ithuba.
Ithuba should also have been excluded as it had not bid for the new permanent licence.
The minister responsible for the National Lottery has awarded an 'emergency' 12-month temporary licence to Ithuba Holdings, the company that has operated the National Lottery for the past 10 years.
The awarding of the temporary licence was made just hours before Ithuba's contract ended at midnight on Saturday.
According to the Lotteries Act, an operator's licence is valid for eight years but may be extended once for a maximum of two years. Ithuba's original licence, issued in 2015, was extended for two years in 2023 and ended this past Saturday.
It is unclear on what grounds Trade, Industry and Competition Minister Parks Tau granted a further year to Ithuba Holdings. This means it will operate the National Lottery for 11 years, rather than the eight it was originally given when its licence was awarded.
In terms of the Request for Proposals (RFP) for the temporary licence, only the eight consortiums that bid for the permanent licence could tender for the temporary one. Ithuba Holdings did not apply for the new operator licence. Instead, a sister company, Ithuba Lottery, with which it shares seven directors, a physical address and a website, applied.
Tau's decision to award the temporary licence to Ithuba Holdings (and not Ithuba Lottery) raises several troubling questions. (Even choosing Ithuba Lottery would have been questionable, since they are only two different companies in a strict legal sense; practically they are the same company. The creation of Ithuba Lottery was, in effect, a sleight of hand.)
Despite two damning court rulings, Tau has used Section 13B in a 2015 amendment of the Lotteries Act, which gives the minister wide powers to issue a temporary licence in certain circumstances. But that does not explain why he chose Ithuba Holdings, a company which, on the face of it, should have been excluded.
Asked for the reason for Tau's decision, as well as other questions about the awarding of the temporary licence, his spokesperson, Yamkela Fanisi, said, 'Thank you, we are on it. We are faced with many media requests. We will revert.'
He had not responded by the time of publication.
Similar questions were also sent to National Lotteries Commission (NLC) board chairperson Barney Pityana, who had also not responded by the time of publication.
Ticking clock
A recent judgment set aside Tau's decisions to issue a RFP for a one-year temporary licence and to extend the bid validity of the main licence for another year. The court found that the tender was unfair as it favoured Ithuba, the only one that could deliver from 1 June.
But the order by Judge Sulet Potterill declaring the temporary licence invalid was suspended for five months. This meant that the licence could still be granted, but only for five months, after which the new licence holder, the Sizekhaya Consortium, which has Goldrush Holdings as a major shareholder, would have to take over.
The NLC then unsuccessfully applied to vary this judgment, which raised the prospect of the sale of National Lottery tickets being suspended at midnight on 1 June.
The NLC's application, which was heard urgently on Thursday at the high court in Pretoria, was opposed by Wina Njalo, one of the companies that bid on the National Lottery licence tender.
Wina Njalo is still considering its legal options.
Tense negotiations
The NLC had entered into negotiations with Ithuba Holdings to run the temporary licence. It is unclear why Ithuba Lottery dropped out and was replaced by the incumbent Ithuba Holdings (which are, for practical purposes, the same company).
What followed were tense negotiations that were still ongoing on Saturday, with Ithuba sticking to its guns and arguing that it was not financially viable to run the temporary licence for five months, GroundUp was told.
GroundUp was told on Saturday, as the clock ticked down to the midnight deadline for a temporary licence to be concluded, that the minister would issue a statement by noon.
But several hours later, Ithuba had not signed the agreement that would ensure that ticket sales would not be disrupted.
Had the negotiations been unsuccessful, the NLC recently told Parliament, there would be no disruption of grants as it had R4.3-billion in reserve to continue to fund worthy causes.
Tau finally issued a statement after 6pm, with less than six hours to go, and the prospect of the National Lottery ticket sales being suspended looming.
In the statement, Tau said: 'I am pleased to report that I have concluded, on advice of the [National Lotteries] Commission, successful negotiations with Ithuba Holdings (RF) (Pty) Ltd and have signed a Temporary Licence Agreement for them to operate the National Lottery and Sports Pool on a temporary basis for a period of 12 months with effect 01 June 2025. The Temporary Licence will ensure the continuation of the [National] Lottery operations in the period that transition is required from the Third to the Fourth Licence operations.'
Tau also said he would appeal the NLC's failed appeal and quoted from the judgment by Judge Omphemetse Mooki to justify his decision. Mooki had said: 'It would be a surprise to the court that the Minister is unable to appoint an operator, on a temporary basis, for a whole year. This is more so because the Minister has more latitude in appointing a temporary operator, as opposed to a fully licensed operator.'
Tau said, 'It is in the context of both the [earlier] 21 and [Mooki's] 30 May 2025 judgments that I received and accepted the advice from the Commission, that I appoint a temporary licence operator on an urgent basis.'