Ithuba poised to run Lottery for next year — despite legal concerns
Parks Tau, the minister responsible for South Africa's lottery, has entered into negotiations with a company with close links to Ithuba Holdings, the current licence holder, for a 12-month temporary licence to run the lottery until 1 June 2026.
This comes after months of delays and uncertainty over who will run the lottery after the current licence expires at the end of this month. Tau has also been accused of favouring Ithuba in the process.
Ithuba Holdings, which has been running the lottery since 2015, was not eligible to apply for the 12-month temporary licence. Ithuba Holdings' original licence expired in 2023 and the contract was extended for two years until 30 May 2025. The Lotteries Act says that the minister is not allowed to extend a licence more than once, and then only for a maximum of two years.
But another company, Ithuba Lottery, which has six of the same directors and the same website as Ithuba Holdings, bid on the temporary licence and is now likely to be appointed.
ALSO READ: Lottery ticket sales likely to be suspended from 1 June
A letter distributed by Zamani Holdings, the owner of Ithuba Holdings, to senior staff confirmed that Ithuba Lottery is the preferred bidder and was currently in negotiations 'to finalise this agreement'.
The temporary licence will run from 1 June 2025 to 31 May 2026. After that, a new company will run the lottery for the next eight years. Annual lottery sales were R7.3 billion in 2024.
Business Day reported earlier this week that the Sizekhaya Consortium, in which gambling company Goldrush is the main shareholder, is likely to be appointed for the eight-year licence. GroundUp has now independently confirmed that the Sizekhaya is the preferred bidder.
Sizekhaya was one of eight consortia that bid for the licence. A source with knowledge of the negotiations told GroundUp that Sizekhaya 'is currently working to meet the requirements and sign the contracts so the minister can announce them as the fourth lottery operator at the end of May'.
If negotiations are successfully concluded, Sizekhaya's licence would come into effect on 1 June 2026, allowing a year to transition from the temporary licence holder and put their tech in place, manufacture ticket sales equipment for retail outlets and hire staff.
Tau's spokesperson, Yamkela Fanisi, did not respond to questions GroundUp sent via WhatsApp by the time of publication. His response will be added if received.
Ithuba favoured?
Wina Njalo, an initiative of Hosken Consolidated Investments (HCI) Foundation, also bid on the eight-year lottery licence.
In March, Wina Njalo applied to the High Court, challenging Tau's decision to issue the temporary licence and asked the court to declare unlawful Tau's failure to appoint the fourth lottery licence holder in time.
Njalo claimed in court papers that Tau was favouring Ithuba by issuing a temporary licence request for proposals on short notice, because Ithuba would be the only company with the technology and infrastructure in place to continue operating the lottery.
In his replying affidavit in the case, Tau said he would announce the successful bid winner for the eight-year licence by 28 May. He said the temporary licence was necessary as the new company will not be ready to take over as operator immediately.
ALSO READ: Government postpones announcement of new lottery licence operator – again
GroundUp understands that the temporary licence conditions make provision for whoever is granted it to use the current licence holder's systems and ticket sales equipment.
The court papers revealed the links between Ithuba Holdings and Ithuba Lottery. Wina Njalo argued in court that only entities that applied for the new licence were eligible to apply for the 12-month temporary licence.
Wina Njalo's affidavit says that they first believed that Ithuba Holdings and Ithuba Lottery were the same entity, 'given the similarities in names'.
But then, Wina Njalo discovered that Ithuba Holdings and Ithuba Lottery were, in fact, two separate companies, but that they shared six active directors. They also share a website. Charmaine Mabuza, who is the CEO of Ithuba Holdings, signed a bid extension notice on behalf of Ithuba Lottery.
Wina Njalo argued that although these are two different companies, they are 'de facto the same party' and Ithuba Lottery should therefore not be eligible to bid on the licences.
ALSO READ: Accounting firms compiled fraudulent financial statements for NPOs – SIU on NLC corruption
Responding in an affidavit, Ithuba Lottery's CEO, Louis Amera du Pisane, insisted that the two Ithubas were 'separate entities'.
He said Wina Njalo had incorrectly assumed that Ithuba Lottery was the incumbent operator of the national lottery. This misconception had led to claims that the temporary licence favoured Ithuba Lottery, which is not the case, he said.
'Wina Njalo's arguments collapse once the distinction between the two entities is understood,' Du Pisane said.
Lotto ticket sales could be suspended
The case was heard earlier this month and judgment was reserved. Should the court rule in favour of Wina Njalo and set aside the temporary licence, it could lead to a suspension of lottery ticket sales until the issue is resolved, which could take many months.
But a suspension is unlikely to stop the National Lotteries Commission (NLC), which relies on a percentage of lottery ticket sales to fund good causes, from issuing grants. The NLC has told Parliament it has reserves of R4.3-billion.
Zamani Holdings is owned by Ithuba Holding's current CEO, Charmaine Mabuza and her husband, Eric Mabuza. Zamani and its subsidiaries have a growing footprint in Africa. Earlier this month, it was appointed as operator for the Tanzanian Lottery. It is also about to launch a national lottery in Uganda and is currently finalising negotiations to run the national lottery in Botswana.
Sizekhaya bid controversy
The Sizekhaya Consortium's leading bid for the eight-year licence has already raised controversy with some political parties.
The EFF has called for Tau to appear before Parliament to explain his decision. BOSA, which has submitted a PAIA application, has called for 'transparency' in how the minister came to his decision.
ALSO READ: EFF slams Treasury for 'unlawful' R300m lotteries transfer
Goldrush, the biggest shareholder in the Sizekhaya Consortium, is a JSE-listed company with extensive experience in online gambling.
The consortium is led by KwaZulu-Natal businessmen Moses Tembe and Sandile Zungu. Zungu ran for the ANC KwaZulu-Natal chair position in 2022 before dropping out after he failed to garner enough support, according to Business Day.
Sizekhaya's tech partner is Genlot, which operates the Chinese lottery — the second biggest in the world.
Based in Shenzhen, China, Genlot is involved in several other lotteries around the world, including Nigeria, Ghana, Kenya, Brazil and Jamaica. The company has an annual turnover of $60 billion in 'sales processed' and has a 19% 'global market share', according to its website.
On Thursday, 15 May, Ithuba Holdings circulated a notice to retailers selling lottery tickets.
Headed 'Lottery system update,' Ithuba Holding chief lottery director, Brendan Burns said the current National Lottery licence will expire on 31 May 2025.
'The Minister of Trade, Industry and Competition has assured the public that a temporary solution will be announced before then to ensure there is no disruption to … operations.'
'In this regard, the award of a temporary lottery licence is expected to be announced shortly.'
'While the final outcome remains uncertain, Ithuba Holdings and Ithuba Lottery must act responsibly and prepare for the possible scenario in which Ithuba Lottery is required to commence operations of the National Lottery for a temporary licence period. It is therefore essential that we proactively implement all necessary measures to ensure operational readiness and continuity,' he wrote, setting out deadlines for the changeover.
'The timelines ahead are tight, and your collaboration is critical in helping us meet these key milestones.'
This article originally appeared on GroundUp and was republished with permission. Read the original article here.
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