Uncertainty looms over National Lottery operations after court ruling

IOL News

2 days ago

Sizekhaya Holdings is led by a consortium that includes KwaZulu-Natal business figures such as Moses Tembe, former Chairperson of the KZN Growth Coalition, and Sandile Zungu, owner of AmaZulu football club.
Image: Sihle Mlambo/IOL
The National Lottery Commission (NLC) yesterday was involved in a crisis meeting to try and resolve the immediate future of the national lottery amidst uncertainty on whether tickets would be available for sale from Sunday.
The uncertainty stemmed from Ithuba Holdings' sister company Ithuba Lottery, which was supposed to run the lottery under a temporary licence for the next twelve months, but the Gauteng High Court ruled last week that it can only do so for five months.
The NLC then applied for the court to change that order, because otherwise Ithuba Lottery may refuse to accept the temporary licence but the court ruled against the NLC on Friday - leaving the lottery in limbo until Sizekhaya Holdings takes over as the National Lottery's new operator in nine months.
Department of Trade, Industry and Competition (DTIC) Minister Parks Tau awarded a multibillion-rand contract on Wednesday to Sizekhaya Holdings to operate the National Lottery - the company is co-owned by KwaZulu-Natal business moguls, Moses Tembe, and Sandile Zungu, the chairperson of the Durban-based Premier Soccer League, AmaZulu FC. They are both linked to several companies.
This decision was met with criticism from organisations that believe it goes against the true spirit of inclusive black empowerment.
The crisis started after Pretoria High Court Judge Omphemetse Mooki ruled that Tau's attempt to extend the contract of the outgoing lottery operator, Ithuba Holding by 12 months, was unconstitutional and illegal.
Judge Sulet Potterill, instead, said Ithuba, whose contract officially ended on Saturday, could continue for the next five months under a temporary licence until Sizekhaya was ready to take over.
However, Ithuba said five months was not financially viable.
Sources within the DTIC and the NLC said the situation was intense as officials were working to avert a lotto blackout and losses of billions of rands.
'Our attorneys are still busy studying the judgment. Until we tick all the boxes, I cannot confirm whether we will have a lottery or we will not have the lottery, but our lawyers are looking at the interests of the masses, and I don't think there will be any crisis,' said NLC spokesperson Rudzani Tshigemane.
Mooki ruled against the NLC's appeal against the previous judgment on the matter launched by a lottery contract bidder, Wina Njalo, against Tau and the NLC's decision to extend the Ithuba licence by 12 months.
Following the initial court order, Tau was forced to announce the winner on May 28, but extended the Ithuba contract by five months through a temporary licence, as per court order.
However, following Ithuba's indication that it was not prepared to accept the five-month extension as it was looking for 12 months, the NLC launched the appeal, which was rejected on Friday.
Mooki heard that if Ithuba accepted only a five-month extension, it would incur a loss of R51 million.
Ithuba told the court that without it accepting the five-month extension, there would 'be an interruption to operations of the national lottery for 9 months from 1 June 2025' as there would be no operator, a situation that would harm members of the public.
Wina Njalo told the court that Ithuba was not entitled to make a profit through an unlawful tender.
It also argued that the Lottery Trust Fund had R2.2 billion in its reserve, which was enough to continue paying the lottery beneficiary organisations until the new operator takes over.
In his affidavit, Tau supported the NLC's application, however Mooki said was not convincing enough for him to rule against the previous judgment, and therefore, he dismissed the NLC's application with costs.
The EFF claimed Tau's decision was a conflict of interest and showed political exposure and backdoor dealings as Zungu and Tembe had links with the ANC.
'We highlighted in our correspondence with Minister Tau and the Portfolio Committee that this amounted to a breach of the National Lotteries Act, which explicitly prohibits the awarding of a licence to any entity with direct political affiliations.
'Minister Tau's refusal to listen and to appear before Parliament, and to proceed with this appointment anyway, represents a complete betrayal of his constitutional responsibilities.
'Instead of ensuring fairness, transparency, and compliance with the Lotteries Act, he has compromised a public asset, by awarding a contract worth over R180 billion to the ANC's cronies in a clear case of state capture,' said EFF national spokesperson Sinawo Thambo in a statement.
Sizekhaya did not respond to a request for comment on the criticism over its appointment.
The EFF said it was consulting with its legal counsel to consider a judicial review of the decision, "which includes, but may not be limited to, interdicting the awarding of the contract".
The Aubrey Tau Foundation, which also condemned the awarding of the contract to Sizekhaya, said it would support legal action against Tau.
'We stand in solidarity with civil society and business leaders who are prepared to take this matter to the highest courts in the land in pursuit of transparency and justice,' the foundation said.
The foundation said Tau should have awarded the contract to new entrepreneurs instead of continuing to enrich politically connected elites.
'Historically, it has been the same faces benefiting under the guise of Black Economic Empowerment (BEE).
'Instead of fostering BEE, in practice, empowered a small group of politically connected capitalists, fixers, and front persons acting as intermediaries between the government and established corporate interests,' said the foundation.
President Cyril Ramaphosa had in November 2020 authorised the Special Investigating Unit (SIU) to investigate allegations of maladministration in the affairs of the NLC and to recover any loss that the NLC or the state has suffered.
In a statement released on Saturday, Tembe said Sizekhaya's gaming pedigree is unmatched and that its shareholder, Goldrush, was bringing into the contract its business experience, including in gaming and online betting space.