Trade, industry & competition minister Parks Tau’s refusal to consent to a proposed draft court order to speed up the awarding of the fourth national lottery licence has set the scene for a legal showdown between him and one of the bidders in the first week of May.
Tau angered bidders for the lucrative R180bn licence when he put on hold a decision to award a permanent licence, opting instead to issue a request for proposal (RFP) for a temporary 12-month licence — a move perceived by some as favouring the incumbent, Ithuba Holdings.
About 18 entities initially bid for the eight-year licence, with eight shortlisted.
The shortlisted bidders, which had made presentations to the National Lotteries Commission, including technical bid presentations, were taken aback when Tau opted for the temporary licence instead of announcing the successful bid. He also extended the bid validity period for the permanent licence.
Early last month, Tau published an RFP for the temporary licence with the closing date set for the end of March. However, some of the aggrieved entities said the RFP contained requirements very similar to those of the permanent licence.
In a letter to bidders sent on March 26, Tau told them he would announce the winning bidder for the fourth licence on May 28.
“I intend to announce the identity of the successful applicant after negotiations regarding the licence have been concluded to my satisfaction. This is an indicative date as it could be affected by a number of factors. The applicants will be informed if a substantial change is envisaged,” he said.
One of the bidders, the Wina Njalo Consortium, has proposed a draft court order stipulating that Tau choose the successful bidder for the permanent licence by no later than May 9, negotiate and conclude a licence agreement with the successful applicant, and issue the licence by no later than May 28 2025.
The draft court order further states that the minister would have to set aside the RFP for the temporary licence and extend the bid validity period for the fourth national lottery licence.
In response to Business Times questions, Wina Njalo CEO Dawid Muller said that since the minister mentioned his target date and that he intended to award the fourth national lottery licence before May 31, “we believe he should have no difficulty with the agreed order. In our view, such an order would simply reflect the minister’s own timeline, help avoid a rushed hearing, and promote transparency and certainty for everyone involved — including other bidders and the public.”
The extension of the bid validity period may be necessary if the process for awarding the fourth licence cannot be concluded, for whatever reason, by May 31 2025
— Pravani Pillay, state attorney
However, Tau, responding via the office of the state attorney, rejected the draft order, saying he has already explained his reasons for wanting to extend the bid validity period and for seeking a temporary licence.
“The extension of the bid validity period may be necessary if the process for awarding the fourth licence cannot be concluded, for whatever reason, by May 31 2025,” state attorney Pravani Pillay said.
“The temporary licence may be necessary for the same reason. In addition, the temporary licence may be necessary even if the process of awarding the fourth licence was concluded by May 31, but the successful applicant cannot, for legitimate reasons, begin operations immediately.”
Muller said Tau’s refusal to agree to the order “obviously raised concerns about his commitment to this timeline. So Wina Njalo will continue pursuing clarity and a firm commitment through our court application, which is scheduled to be heard in the first week of May.”
Pillay said the “the minister reserves the right to only announce the identity of the successful applicant once the final negotiations regarding the licence have been concluded to his satisfaction. Should negotiations on the final terms of the licence fail to be concluded to the satisfaction of the minister, [he] reserves the right to negotiate with the next ranking applicant, unless there are objective grounds for the minister to negotiate with another applicant.”
Tau has said previously the bid extension is necessary to ensure that the process is fair and results in the selection of a successful applicant that is best equipped to handle the complexities of the National Lottery and Sports Pools Licence.
It appears the evaluation for the fourth licence and the temporary licence are running in parallel. The RFP for the temporary licence contained criteria about operational readiness and transition, which requires the successful bidder to prioritise essential games and processes and “demonstrate operational readiness to assume operation” of the national lottery and sports pools by June 1.
The successful applicant would also have to pay a temporary licence fee of R1.5m, a temporary licence performance bond of R25m, and a temporary sports pool licence fee of R200,000.
The assessment for the applications was expected to take place from April 1-13, meaning it would have been completed by now had Tau adhered to his deadlines.
Some of the bidders have argued a temporary licence does not make sense given the steep financial requirements, which include setting up betting infrastructure around the country. They argue that Ithuba already has the existing infrastructure, giving it a clear advantage.
To qualify for shortlisting, interested bidders must partner with an international firm that has technical expertise in operating the infrastructure required to manage a multibillion-rand lottery. It’s understood some bidders have partnered with American companies, while some chose technical partners from Europe or China.
Tau’s spokesperson had not responded to several attempts for comment at the time of publication.
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