The conditions of a 12-month lottery licence bid, which the Pretoria high court found favoured Ithuba Holdings, the company that has operated the National Lottery for the past 10 years, were “unavoidable and natural” in the specialised lottery industry, says trade, industry & competition minister Parks Tau.
Tau has filed an application for leave to appeal the court's decision not to allow his department to issue a temporary 12-month lottery licence. The short-term licence is intended to fill the gap between the conclusion of Ithuba's eight-year licence — which ended last weekend after already receiving a two-year extension in 2023 — and the start of the fourth National Lottery licence on June 1 2026, which has been awarded to the Sizekhaya Holdings consortium.
Judge Sulet Potterill found Tau’s temporary license bid unconstitutional, unlawful and invalid. Potterill also set aside Tau's decision to grant Ithuba a licence until May 31 2026. Instead she allowed for a five-month temporary licence. Ithuba had said this time frame would not be financially viable for the company.
The ruling — just under two weeks before Ithuba's licence expired — placed the lottery on the brink of a blackout, which Tau averted at the eleventh hour by lodging an application for leave to appeal on Saturday last week, and immediately after granting Ithuba Holdings a temporary licence starting from last Sunday.
Tau's appeal means the court ruling is held in abeyance until an appeal outcome is reached, effectively allowing the minister to legally appoint Ithuba to run the lottery for 12 months.
The temporary licence was granted to Ithuba Holdings, not Ithuba Lottery, which had applied for the fourth licence. However the two share offices and the majority of directors.
In his notice for leave to appeal filed this week, Tau accused the court of judicial overreach into his executive functions, saying it did not accord him appropriate recognition that an early disclosure [of the winning bidder] would compromise the lottery licence adjudication processes.
He denied an intention to favour any specific bidder.
“While the Minister acknowledged that the incumbent licensee might possess an inherent operational advantage due to its established infrastructure in SA to conduct the National Lottery, this is a natural and unavoidable consequence of incumbency in such a specialised field,” the court papers stated.
This, however, did not “equate to the RFP [request for proposal] being unfairly designed or tailored to create or exploit such an advantage”.
Tau argued that the court erred in finding that his issuance of the temporary licence RFP constituted reviewable administration action.
The 12-month period for the temporary licence was set to ensure it was financially viable to potential applicants as six months or less — which the court stipulated — would not be sensible.
Tau said the court erred by not fully appreciating the complexities in the adjudication and awarding of the National Lottery licence and that his delays in announcing the winning bidder, which was expected late last year, were justifiable and did not amount to a failure to decide.
Ithuba this week declined to comment, saying the appeal had not been initiated by them.
Meanwhile, the National Lotteries Commission (NLC) has lodged two appeals against the two recent court rulings of May 21 and May 30.
The NLC believes Potterill misdirected herself and erred as her ruling on May 21 suggested that the minister and the NLC “predetermined the outcome of the tender process or framed the RFP to predetermine the outcome”.
The commission then went back to court to ask for the order to be amended, but failed again.
The NLC is arguing that judge Omphemetse Mooki, who made the May 30 judgment, exercised his “discretion wrongly in that it was influenced by wrong principles, misdirected itself on the facts and reached a decision that could not reasonably have been made by a court properly directing itself to all the relevant facts and principles”.
The NLC said Mooki was presented with evidence that Ithuba Lottery had secured the required R100m in funding “but which its shareholders and funders were not prepared to risk for a licence period of five months”.
“The second court failed to take account of this evidence and assess it in the light of the first court’s findings,” the NLC argued.
It said that the evidence was a new fact and had not been placed before the first court.
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