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Daily Maverick
20-06-2025
- Business
- Daily Maverick
Government plans national lottery: A shift toward state control amid concerns of corruption
Since its inception, a private company has been responsible for operating the lottery and selling tickets. That is set to change in 2034. The government plans to introduce a state-run national lottery instead of using a private operator, as has been the case since the Lotto was launched 25 years ago. Details of the intention to effectively nationalise the lottery were revealed in a Request for Proposals (RFP) for the latest operator licence, which has been awarded to the Sizekhaya Consortium. If a state lottery were to be implemented, it would only happen in 2034, when Sizekhaya's eight-year licence, which commences on 1 June 2026, expires. The concept of a state-run lottery was first introduced in a 2013 amendment to the Lotteries Act but was never implemented. National Lotteries Commission commissioner Jodi Scholtz told GroundUp that the provision for a state-run national lottery in the amendment 'was in part a response to the disruption experienced in 2007, when the country found itself without an active lottery operator for several months' due to litigation. 'This legislative provision was intended to ensure continuity of the lottery and protect public interest and revenue streams designated for good causes, should similar challenges arise in the future,' she said. The issue of a state-run lottery was hotly debated by the trade and industry portfolio committee during the previous, sixth Parliament. There were disagreements among MPs about the wisdom of nationalising the lottery, with some arguing that in light of the corruption at state entities this could lead to further misappropriation of funds. Those who were for nationalisation said it would reduce profiteering by the licence holder. One of the champions for nationalisation was former National Lotteries Commission (NLC) board member Dr Muthuhadini Madzivhandila, who argued for a state-run lottery when he unsuccessfully applied for the post of NLC chairperson. Madzivhandi, who subsequently died, corruptly benefited from lottery grants. Since the amendment, several policy and legal review processes had been conducted 'to explore the practical implementation of this provision,' said Scholtz. Yamkela Fanisi, the spokesperson of trade, industry and competition minister Parks Tau, failed to respond to questions about the prospect of a state-run lottery and the reasons for the possible change. Transition to state lottery In terms of the Request For Proposals, bidders for the fourth lottery licence were 'required to commit to positioning the state to transition from privately operated National Lottery and National Sports Pool operations to a state-owned and operated National Lottery'. Applicants were informed that they had to 'demonstrate their ability to capacitate the state to prepare for and ultimately become the operator of the National Lottery and the National Sports Pool at the expiry of the Licence Period'. They were also required to provide a plan for how they would 'support the state in developing the necessary infrastructure, skills, and capacity to operate the National Lottery and Sports Pool' — a key part of the Request For Proposals deals with the transfer of rights to technology to operate the lottery. Responding to questions, Sizekhaya sent an unsigned written reply: 'Genlot [its Chinese tech partner] has assigned intellectual property rights for its lottery software to its 51% locally owned subsidiary, Genlot SA.' In terms of its agreement, Genlot SA is authorised to transfer this intellectual property (IP) to 'the South African state if it decides to operate the lottery in the future', Sizekhaya responded, declining to disclose details of the terms and conditions of such a rights transfer. Opening the door to corruption and waste The prospect of a state-run lottery opening the door to corruption and inefficiencies in light of what happened at many parastatals and government entities, where billions of rand were lost, was raised by some critics. The DA's Mat Cuthbert, who played a key role in Parliament in helping expose the endemic corruption that overwhelmed the National Lotteries Commission under its previous leadership, said: 'At the time, the National Lotteries Commission only had access to approximately 34% of all revenue generated by the National Lottery, housed under the NLDTF (National Lottery Distribution Trust Fund.) One can only imagine how much more public funding would have been stolen had they had access to the approximately R7-billion generated in ticket sales revenue per annum.' Professor Alex van den Heever of the Wits School of Governance was also sceptical of a state-run lottery. The wide discretion granted to the minister of Trade, Industry and Competition to appoint the board, commissioner and distributing agencies 'has been a recipe for corruption as a single person appoints all the strategic decision-makers', he said. The move to a proposed 'state-led approach failed to address the corporate governance flaws of the original configuration', Van den Heever said. 'Ministerial discretion, the likely driver of structural corruption to date, is retained at the same levels as before. There is therefore a high likelihood of ministerial overreach, exacerbated by a general absence of independent supervision, institutional safeguards, added to the uncertain capabilities of state structures. 'It is my expectation that this approach is designed to facilitate state capture and corruption of various forms — improper appointments, corruption in procurement and the selection of distributing agencies. The new provisions specify that certain accountability structures need to be implemented, which are inadequate, with their design and implementation vulnerable to the wide discretion of the minister. This discretion enables the minister to circumvent any implemented formal structures. 'When power is concentrated, circumvention is relatively straightforward. In my assessment, the same levels of corruption as before are likely to persist into the future. Nothing is cured by this change.' DM
News24
20-06-2025
- Business
- News24
Alarm raised over plans for state-run lottery
Government plans to nationalise the South African lottery when the current private operator's licence expires in 2034. The new Sizekhaya Consortium must help the state develop skills and infrastructure to run the lottery itself from 2034. Critics warn that a state-run lottery could lead to more corruption, given the billions lost at parastatals and government entities. The government plans to introduce a state-run national lottery instead of using a private operator, as has been the case since the Lotto was launched 25 years ago. Details of the intention to effectively nationalise the lottery were revealed in a Request for Proposals (RFP) for the latest operator licence, which has been awarded to the Sizekhaya Consortium. If a state lottery were to be implemented, it would only happen in 2034, when Sizekhaya's eight-year licence, which commences 1 June 2026, expires. The concept of a state-run lottery was first introduced in a 2013 amendment to the Lotteries Act but was never implemented. National Lotteries Commission (NLC) commissioner Jodi Scholtz told GroundUp that the provision for a state-run national lottery in the amendment 'was in part a response to the disruption experienced in 2007, when the country found itself without an active lottery operator for several months' due to litigation. 'This legislative provision was intended to ensure continuity of the lottery and protect public interest and revenue streams designated for good causes, should similar challenges arise in the future,' she said. The issue of a state-run lottery was hotly debated by the trade and industry portfolio committee during the previous, sixth Parliament. There were disagreements among MPs about the wisdom of nationalising the lottery, with some arguing that in light of the corruption at state entities that this could lead to further misappropriation of funds. Those who were for nationalisation said it would reduce profiteering by the licence holder. One of the champions for nationalisation was former National Lotteries Commission (NLC) board member Dr Muthuhadini Madzivhandila, who argued for a state-run lottery when he unsuccessfully applied for the post of NLC chairperson. Madzivhandi, who subsequently died, corruptly benefited from lottery grants. Since the amendment, several policy and legal review processes have been conducted 'to explore the practical implementation of this provision,' said Scholtz. Yamkela Fanisi, spokesperson for trade, industry and competition minister Parks Tau, failed to respond to questions about the prospect of a state-run lottery and the reasons for the possible change. Transition to state lottery In terms of the RFP, bidders for the fourth lottery licence were 'required to commit to positioning the state to transition from privately operated National Lottery and National Sports Pool operations to a state-owned and operated National Lottery'. Applicants were informed that they had to 'demonstrate their ability to capacitate the state to prepare for and ultimately become the operator of the National Lottery and the National Sports Pool at the expiry of the Licence Period'. They were also required to provide a plan for how they would 'support the state in developing the necessary infrastructure, skills, and capacity to operate the National Lottery and Sports Pool'. A key part of the RFP deals with the transfer of rights to technology to operate the lottery. Responding to questions, Sizekhaya sent an unsigned written reply: 'Genlot [its Chinese tech partner] has assigned intellectual property rights for its lottery software to its 51% locally owned subsidiary, Genlot SA.' In terms of its agreement, Genlot SA is authorised to transfer this intellectual property (IP) to 'the South African state if it decides to operate the lottery in the future', Sizekhaya responded, declining to disclose details of the terms and conditions of such a rights transfer. Opening the door to corruption and waste The prospect of a state-run lottery opening the door to corruption and inefficiencies in light of what had happened at many parastatals and government entities, where billions of rands have been lost, was raised by some critics. The DA's Mat Cuthbert. who played a key role in Parliament in helping expose the endemic corruption that overwhelmed the NLC under its previous leadership, said, 'At the time, the NLC only had access to approximately 34% of all revenue generated by the National Lottery, housed under the NLDTF (National Lottery Distribution Trust Fund.) One can only imagine how much more public funding would have been stolen had they had access to the approximately R7 billion generated in ticket sales revenue per annum.' Professor Alex van den Heever of the Wits School of Governance was also sceptical of a state-run lottery. The wide discretion granted to the Minister of Trade, Industry and Competition to appoint the board, commissioner and distributing agencies 'has been a recipe for corruption as a single person appoints all the strategic decision makers', he said. The move to a proposed 'state-led approach failed to address the corporate governance flaws of the original configuration,' Van den Heever said. 'Ministerial discretion, the likely driver of structural corruption to date, is retained at the same levels as before. There is therefore a high likelihood of ministerial overreach, exacerbated by a general absence of independent supervision, institutional safeguards, added to the uncertain capabilities of state structures. 'It is my expectation that this approach is designed to facilitate state capture and corruption of various forms - improper appointments, corruption in procurement and the selection of distributing agencies. The new provisions specify that certain accountability structures need to be implemented, which are inadequate, with their design and implementation vulnerable to the wide discretion of the minister. This discretion enables the minister to circumvent any implemented formal structures. 'When power is concentrated, circumvention is relatively straightforward. In my assessment, the same levels of corruption as before are likely to persist into the future. Nothing is cured by this change.'
TimesLIVE
05-06-2025
- Business
- TimesLIVE
Should the national lottery be run by government?
Newly appointed national lottery operator Sizekhaya Holdings is set to be the last private company to run the multibillion-rand national lottery as South Africa is preparing itself for it to be run by the government. The national lottery is considered the country's biggest tender as it's estimated to make R180bn over an eight-year period. Provisions of the Lotteries Amendment Act of 2013 empower the state to be able to run the national lottery. National Lotteries Commission (NLC) commissioner Jodi Scholtz said the provision for a state-run lottery was to prevent a lottery blackout like the one in 2007 by the then losing bidder Uthingo. 'We can confirm that the inclusion of the provision for a state-run national lottery in the 2013 amendment was in part a response to the disruption experienced in 2007, when the country found itself without an active lottery operator for several months due to delays in the licensing process,' Scholtz said. However, she said a state-run lottery would require significant institutional planning and operational readiness, budget allocation and Treasury approval. The national lottery has been embroiled in several controversies including corruption, mismanagement and licensing disputes such as the delays and court battles to award Sizekhaya Holdings the licence. On Wednesday, Sowetan reported the Special Investigating Unit secured an order to freeze a multimillion property in Midstream, registered under Southern African Youth Movement director Alfred Muzwakhe Sigudhla, which was allegedly bought with some of the R36m lottery grants meant for community projects. Last week, the Sunday Times reported Sizekhaya board chairperson Moses Tembe was open to handing over the intellectual property of its lottery system design and innovation to the government to help create capacity for a state-run lottery. 'The government will own the lottery, and it may choose to say: Sizekhaya or Genlot help us manage it to ensure that the technology works, because government is not in that business ... but as a property it will not be our property,' Tembe said.
TimesLIVE
21-05-2025
- Business
- TimesLIVE
National Lotteries Commission vows to right wrongs identified by A-G
The National Lotteries Commission (NLC) says it remains committed to addressing systemic failures and other problems cited by the auditor-general (A-G) in its 2023/24 audit outcomes. Last week, the A-G issued a qualified audit outcome for the NLC. It noted systematic failures in governance, weak financial controls, lack of service delivery and failure to comply with legislation. The A-G warned that the NLC had undermined its own mandate by failing to ensure funds reached the intended beneficiaries. In a statement on Wednesday, the NLC said corrective actions were under way. 'The NLC has implemented stricter pre-payment documentation checks, updated its accounting policies in line with generally accepted accounting practice, strengthened asset management controls and is automating key elements o the grant funding process.' The commission said it had suspended payments on flagged grants, pending individual compliance reviews. It had also established a loss control committee to investigate irregular expenditure and oversee consequence management. 'Progress on these measures will be reflected in the commission's forthcoming mid-year performance update.' This will be in October. The commission said a stable and skilled workforce was essential for effective oversight of grant funding and regulatory functions. 'Therefore the NLC is advancing senior leadership appointments and driving an organisation-wide hiring programme to reduce current vacancy levels and strengthen critical capabilities.' The commission said it was also collaborating with the A-G, the portfolio committee on trade, industry and competition and the National Treasury to align remedial milestones and secure technical support. 'We confirm that the finance team has worked tirelessly to enhance governance and improve policies and processes to address the internal control deficiencies identified. The NLC board and senior management have made significant strides in closing off these matters and is confident that in the new financial year 2025/26, the outcome will improve,' said NLC commissioner Jodi Scholtz. Meanwhile, the standing committee on public accounts says it wants answers from the commission and the department of trade, industry and competition after two concerning briefings from the A-G and the Special Investigating Unit (SIU) that revealed weak financial management, maladministration and corruption at the NLC amounting to over R2bn. Last week, the A-G briefed Scopa on the NLC's 2023/24 audit outcomes and financial performance. Scopa said key audit findings included: grants allocated to unqualified applicants with no supporting documentation, overfunding of projects lacking feasibility studies or proper plans, underspending of R957m on grants from a R1.52bn budget incomplete or undelivered infrastructure projects, including the Motheo Sports Complex and eDumbe Old Age Home, high vacancy rates in critical units such as finance, ICT and grants adjudication, and only 67% of grant targets and 75% of regulatory compliance benchmarks were achieved. On Wednesday, the SIU briefed the committee on investigations under way at the NLC. The COO at the SIU, Leonard Lekgetho, told Scopa that investigations mandated by Proclamation R32 of 2020 — for the period January 2014 to November 2020 — uncovered a corruption network involving senior NLC officials, board members, professional enablers and hijacked non-profit entities. The SIU also noted a modus operandi of funnelling grants through hijacked non-profit organisations and non-profit companies as well as fraudulent applications backed by doctored financials from complicit auditing firms.
The Herald
15-05-2025
- Business
- The Herald
National Lotteries Commission extends application period to May 30
The National Lotteries Commission (NLC) has extended the 2024/25 call for applications to May 30. The current application window, which originally opened on December 2 2024, was previously extended from the initial deadline of March 31 to May 16 and now to May 30 to ensure greater participation by civil society organisations. It said organisations that had already registered and intended to register their profiles on the NLC's Thuthuka online system were still encouraged to complete their registration and proceed with the application process. 'We humbly apologise for the challenges experienced by many applicants on the Thuthuka online system, and in keeping with our commitment to fairness, accessibility and public accountability, the NLC will continue implementing urgent support measures such as help desk sessions in provinces,' said NLC commissioner Jodi Scholtz. These support measures will include personalised continuous communication and the targeted education and awareness sessions to ensure that no deserving organisation was excluded. The NLC said it was committed to contacting all organisations already in the system to assist in resolving outstanding issues, ensuring they were given a fair opportunity to complete their applications. 'All prospective grant applicants must ensure that their board of directors are verified and fully compliant with the department of social development for NPOs and the Companies Intellectual Property Commission's database records for NPCs. 'The registered organisations with at least 50% of their directors verified may submit their applications before May 30 2025,' said Scholtz. The NLC said it was imperative that 100% directors' verification, including mandatory documents, was complete before any grant agreement could be accepted. 'No grant agreement will be signed unless all directors are fully verified.' TimesLIVE
