Johannesburg – Just weeks after initiating a tender process for a temporary lottery operator, Minister of Trade, Industry and Commerce Parks Tau has made an unexpected about-turn, announcing that he will reveal the next operator of South Africa's national lottery and sports pools "on or before Wednesday, 28 May 2025".
This latest development casts a shadow of uncertainty over the future of lottery ticket sales, with the current operator's licence set to expire on 31 May.
Tau communicated his decision via a notice published on the virtual data room platform, a secure platform used to communicate directly with approved bidders. The details of this decision, which have not been publicly released, were shared on the platform last Wednesday.
In his notice, Tau stated his intention "to announce the identity of the successful applicant after negotiations regarding the licence have been concluded to my satisfaction".
He also drew the bidders' attention to a clause in the Request for Proposal (RFP): "Should negotiations on the final terms of the licence fail to be concluded to the satisfaction of the minister, the minister reserves the right to negotiate with the next ranking applicant unless there are objective grounds for the minister to negotiate with another applicant."
This announcement follows Tau's decision late last month to extend the bid adjudication period by a year, a move that was met with confusion and concern. At the time, the Minister remained silent on what would happen to lottery ticket sales after Ithuba's licence expired.
With Ithuba's licence expiring at midnight on 31 May, it now appears increasingly likely that the sale of lottery tickets will be suspended.
According to one of the bidders, who spoke to GroundUp on condition of anonymity, unless Ithuba is re-awarded the licence – a decision that would likely trigger a flurry of legal challenges from unsuccessful bidders – "it appears likely that the lottery will be suspended while the winner sets up the hardware and software it will need to operate the lottery".
The source explained the complexities of transitioning between operators: "It takes six months to transition between operators. The new operator runs parallel to the old one. There is a lead time to manufacture the machines [lottery ticket sales equipment]. You also need to have data centres etcetera set up so that when the switchover to the new operator happens, you are ready."
Despite the potential disruption to lottery ticket sales, National Lotteries Commission (NLC) Commissioner Jodi Scholtz recently assured Parliament that the NLC would be able to continue allocating grants to worthy causes and covering its overheads from its R4.3-billion reserve fund.
Ithuba was initially granted the eight-year licence, valued at between R60-billion and R65-billion over its duration, in June 2015. Just before its expiry on 31 May 2023, the then-Minister Ebrahim Patel extended the licence for 24 months after the NLC argued that Covid-19 had negatively impacted Ithuba's earnings.
However, the Lotteries Act only permits the minister to extend a licence for a non-renewable period of 24 months, leading to the perception that the proposed temporary licence was an attempt to circumvent this restriction.
Court Action to Proceed Despite Announcement
Tau's communication comes a day after one of the bidding consortiums, Wina Njalo, an initiative of the HCI Foundation, launched an urgent court application in the Pretoria High Court on 24 March, seeking to compel the minister to award the fourth licence.
Wina Njalo is seeking a court order directing Tau to announce the successful bidder before 9 May and to negotiate and conclude the licence agreement no later than 31 May.
Despite Tau's change of heart, Wina Njalo intends to proceed with its application, according to a source familiar with the matter who wished to remain anonymous.
Wina Njalo declined to comment.
In its application, Wina Njalo accuses Tau of "frustrating" the awarding of the fourth national lottery licence to favour Ithuba.
Wina Njalo has also requested the Pretoria High Court to declare the request for proposals for the temporary licence unconstitutional and unlawful. This matter is scheduled to be heard on 22 April.
The source told GroundUp that the minister's decision to appoint a permanent lottery operator rather than issue a temporary licence does not address the issues raised in Wina Njalo's application.
In his founding affidavit, Wina Njalo CEO Dawid Muller stated, "The stark discrepancy between the slow moving fourth national lottery licence process and the extremely expedited novel temporary licence process in respect of the same bidders, confirms that the further delay in awarding the fourth licence and any award of a temporary licence is irrational, unreasonable and for ulterior purpose or otherwise unconstitutional."
Muller also argued that the minister's "alleged concerns" regarding the fourth licence bidding and evaluation process were unfounded, as the temporary licence was restricted to the approved bidders for the fourth licence.
He questioned how the minister could make an "expedited decision" in one process but not in the other.
"The approach is so entirely irrational that it can give rise to only one conclusion: that the Minister is actuated by an ulterior purpose and is acting in a manner which will advance the interest of one party – Ithuba."
Concerns Over Transparency and Delays
When he postponed his decision in December last year, Tau alluded to potential issues, including the political connections of some members of bidding consortiums.
"I must also ensure that the owners and managers of the successful applicants are, as the Act states, 'fit and proper persons'. In addition, I must ensure that no political party or political office-bearer has any direct financial interest in the applicant or a shareholder of the applicant."
A source close to one of the consortiums bidding for the licence told GroundUp: "If he can make a decision and does so before 31 May, there was no need for extension of the bid validity for one year, and that whole effort was just plain cock and bull. He has completely [messed] up this process. It was such a simple thing to do – just follow the recommendations of NLC, which he has had since October last year."
Another source close to a different consortium told GroundUp before Tau's latest decision that they would not apply for the temporary licence to run the national lottery for a year when the current licence expires on 31 May.
"Only Ithuba could run the lottery from 1 June, and the high cost involved in running the temporary licence means it makes no sense for us to bid for just a year. We have already spent between R15-million to R20-million on our bid, and that is what we will concentrate on," he said.
Another source involved with one of the bidding consortiums also questioned the time Tau has taken to decide on the fourth lottery licence.
The RFP for the second licence took ten months from bid submission to licence signature, while the third licence took 11 months, the source told GroundUp.
"In the case of the third licence, [former] minister [Rob] Davies, like the current situation, requested further evaluations and investigations for matters similar to what the minister vaguely suggested in his December 2024 media release. In fact, Minister Davies received the Adjudication Report on 11 August 2014 and engaged with the Preferred and Reserve Applicants on 23 October 2014 – just 2 months and 11 days later.
"For the fourth licence, the RFP was announced in August 2023, with a submission deadline of 3 February 2024. Now, since receiving the proposals, 14 months have passed without an announcement or a signed licence, even though this RFP process was already delayed by two years," the source said.
