Ithuba Lottery has initiated court proceedings to challenge Minister of Trade, Industry and Competition Parks Tau’s decision to award the fourth lottery license to Sizekhaya Holdings. Ithuba Lottery, a sister company of Ithuba Holdings—who has successfully run the South African lottery for the past eight years—claims the award process was flawed.
Background on the Ithuba License Awarded
In June, Minister Tau utilized his special powers under the National Lotteries Act to temporarily extend Ithuba Holdings’ license for 12 months. This extension effectively grants Sizekhaya a grace period to prepare for running the lottery. Ithuba Lottery contends that this move demonstrates Sizekhaya’s failure to comply with the Request for Proposals (RFP), which required the winning bidder to have financing in place and the capacity for a seamless transition.
Allegations of Political Connections
Ithuba Lottery has raised concerns regarding Sizekhaya’s shareholders, suggesting potential political ties that could violate the Lotteries Act. The company argues that these connections undermine the legitimacy of the award.
Legal Proceedings Initiated
On July 8, Ithuba Lottery filed an application in the Pretoria High Court, following a similar action from another unsuccessful bidder, Lekalinga, a Serbian-based company. Both companies have requested that the minister provide reasons for his decision, allowing them to refine their legal arguments before the minister submits his response.
Key Issues in the Legal Challenge
The core of Ithuba Lottery’s challenge revolves around Sizekhaya’s ability to run the lottery without fully committed funding is under scrutiny. They have indicated funding will not be secured until October 22.
Ithuba contends that bidders were required to have a comprehensive transition plan, which Sizekhaya has allegedly failed to demonstrate.
Minister’s Delayed Announcement
The minister’s eight-month delay in announcing the successful bidder has generated controversy. His decision to issue a temporary license, followed by the award to Sizekhaya just two days before Ithuba Holdings’ license expired, has raised questions. Despite criticism, Ithuba Lottery was the only bidder for the temporary license, which was later capped at five months due to court action from another bidder.
Louis Almero Du Pisanie, Ithuba Lottery’s chief operations and financial officer, argues that the court should set aside the award to Sizekhaya and compel the minister to make a fresh decision. He emphasizes that Ithuba Lottery is 100% black South African owned, with a strong management team, and was fully prepared to operate the lottery from June 1.
Du Pisanie also highlighted reports suggesting that shareholders of Sizekhaya have close ties to the ANC, raising further questions about the legitimacy of the award. He noted that Minister Tau had publicly stated he needed time to investigate these political connections, indicating a lack of thorough consideration prior to the decision.
The minister is required to file the record of his decision by early August. As the legal proceedings unfold, the outcome will have significant implications for the future of the South African lottery.
