National lottery licence thrown into uncertainty after court scraps Sizekhaya award

The future of South Africa’s national lottery has been thrown into uncertainty after the North Gauteng High Court overturned the awarding of the fourth lottery and sports pools licence to Sizekhaya Holdings RF (Pty) Ltd, finding flaws in the process and ordering trade, industry and competition minister Parks Tau to reconsider the decision.

In a significant ruling that reopens the battle for one of the country’s most lucrative public licences, the court set aside both the licence award and the licence agreement concluded between the minister, the National Lotteries Commission (NLC) and Sizekhaya.

Judgment

Judge Norman Davis found serious shortcomings in the process leading to the award, including the involvement of a ministerial committee that effectively ran a “parallel process” to evaluate bids.

The court further found there was “no indication” that Tau had properly considered the recommendations of the quality assurance committee before making his final decision.

The judgment followed review applications brought by Ithuba Lottery and the Ringeta Consortium, both of which challenged the legality and fairness of the licensing process.

Major setback for Sizekhaya

The ruling represents a major blow for Sizekhaya, which was announced in May as the preferred bidder to operate South Africa’s national lottery and sports pools for the next eight years.

The award immediately sparked legal challenges from unsuccessful bidders and intensified scrutiny of the selection process, already plagued by delays and controversy.

Legal challenge

Last year, Ithuba Lottery approached the courts to halt Sizekhaya’s takeover, arguing the process was flawed, that proper due diligence had not been conducted, and that key requirements in the request for proposals had not been adequately considered.

While declaring the licence award and agreement invalid, the court suspended the order to avoid disruption to national lottery operations.

Licence awards

Instead, the court suspended the declaration of invalidity for two consecutive six-month periods.

The first six months will allow Tau to reconsider the licence award and make a fresh determination on who should operate the national lottery.

The second six-month period will allow time to negotiate and conclude a new licence agreement and, if necessary, implement transitional arrangements should another bidder ultimately be selected.

The court also directed that any fresh decision must be made without relying on the ministerial committee’s report and recommendations.

Ithuba claims vindication

Ithuba Lottery welcomed the judgment, describing it as a validation of its long-held concerns about the integrity of the licensing process.

“The judgment vindicates Ithuba’s stance that the appointment of the South African national lottery operator must be guided by the principles of fairness, transparency and accountability and must comply with the applicable legal and regulatory framework.”

The company said the ruling reinforced the principle that appointing a lottery operator must be lawful and in strict compliance with applicable regulations.

Review judgement

Ithuba confirmed that it is reviewing the judgment with its legal team to determine its implications and consider its next steps.

“Ithuba Lottery is currently reviewing the judgment with its legal representatives to consider its implications for Ithuba Lottery and the appropriate next steps.”

The judgment leaves the future of the fourth lottery and sports pools licence unresolved and places the decision squarely back in Tau’s hands.

The minister now has 12 months to revisit a tender process dogged by legal disputes, delays, and allegations of irregularities before deciding who will ultimately run South Africa’s national lottery in the years ahead.

Mashatile

Last year, Deputy President Paul Mashatile denied suggestions of political interference in the awarding of a lucrative national lottery licence to Sizekhaya Holdings.

Among Sizekhaya’s shareholders is Bellamont Gaming, a company co-owned and co-directed by Khumo Bogatsu and Moses Tembe, the KwaZulu-Natal businessman who chairs Sizekhaya.

Bogatsu is the twin sister of Humile Mashatile, the deputy president’s wife.