Minister of trade, industry and competition Parks Tau said that, though unfortunate, it is not an anomaly for the national lottery tender process to be adjudicated by the courts, considering the history of the previous three licences.
This as incumbent operator Ithuba prepares to head to court to challenge Tau’s decision to award the fourth licence to operate the popular lottery to Sizekhaya, which beat seven other bidders. Business Day understands that other bidders are set to join Ithuba’s challenge to the lawfulness of Tau’s decision.
“The National Lotteries Commission (NLC) is working with Sizekhaya Holdings in preparation for the transition and commencement of the fourth licence. Since inception, every award of the lottery licence has been the subject of litigation,” Tau said in a written response to a parliamentary question by the IFP.
“It can be anticipated that with seven applicants that were unsuccessful, litigation will inevitably ensue.”
Tau and the NLC are expected to launch a fierce defence of the process followed to award Sizekhaya the eight-year licence.
The history of the tender is marred with litigation. When Ithuba was chosen as the preferred bidder, then-operator Gidani unsuccessfully challenged the award, arguing that Ithuba had not demonstrated that it had adequate financial resources to operate the lottery.
Gidani itself, when it was awarded the second licence to operate the lottery, faced litigation by the country’s first lottery operator, Uthingo.
Ithuba is challenging the award of the fourth licence on several grounds. In the main, Ithuba in its affidavit says “it appears Sizekhaya lacked fully committed funding prior to the award, since it has indicated that it will only secure funding by 22 October 2025”.
According to Ithuba, this constitutes unlawfulness, as Tau should not have awarded the contract to Sizekhaya without fully committed funding when he made his decision in May.
Ithuba said it secured R280m in capital from its shareholders and a funding commitment from Standard Bank of R700m.
Sizekhaya is expected to refute the allegation it does not have funding and will tell the court bank guarantees were made to the NLC before the licence was awarded.
The second leg of Ithuba’s challenge is that Sizekhaya was awarded the licence at a time it was not able to “ensure continuous and seamless transition from the existing operator”.
It bases its argument on the NLC’s contention that Sizekhaya said it would need a nine-month transition period to enable it to take over the lottery.
Sizekhaya is expected to argue that the timelines contained in the request for proposals were “indicative”, giving the minister the right to amend, change or augment the timetable, a process he has already done, as he was initially supposed to award the licence in September last year.
Tau awarded the tender only in May after delaying the process to ensure that the owners and managers of the successful applicants were, as the National Lotteries Act states, “fit and proper persons”.
The third leg of Ithuba’s legal challenge refers to media reports on Sizekhaya’s political connections. It cited a report by an article by amaBhungane Centre for Investigative Journalism, which raised Sizekhaya’s “close links” to deputy president Paul Mashatile.
Sizekhaya has Moses Tembe and Sandile Zungu as shareholders, who along with other shareholders, are in partnership with JSE-listed group Goldrush.
AmaBhungane reported Mashatile’s sister-in-law has links to Sizekhaya via her directorship in Tembe’s outfit, Bellamont Gaming.
It also reported Tembe and Zungu were part of Mashatile’s entourage to France in May that sought to deepen economic ties between the two countries.
When reached for comment, Tembe said he would not go into the merits of Ithuba’s legal challenge as this would be addressed in court, save to say the consortium presented a “superior bid”, worthy of being awarded the licence.
“We presented a bold, innovative and, I dare say, world-class bid that will revolutionise the lottery, to the ultimate benefit of worthy causes. Our bid, backed by unmatched technical solution provider Genlot, won on the strength of its merits,” Tembe, who chairs Sizekhaya, said.
“The public must be excited about our offering which will increase their chances of winning, thus making the games more attractive. So confident are we of our bid that we believe the annual sales estimates of the NLC are very conservative, compared to what we are going to take to market.”
Tembe said the “obsession” to link Sizekhaya’s win to Mashatile cried of “desperation” by the consortium’s detractors.
He said the relationship with Mashatile had never been secret and that nowhere in Ithuba’s court challenge did they specify how relations with Mashatile swayed the licence in Sizekhaya’s favour.
“Zungu and I have been in business for over 30 years and our success was never built on political links. We are no Island business people, whose mission is to make profits and pay lip service to the business environment,” Tembe said.
“We’ll continue to engage and foster responsible relationships with politicians without fear on economic policy issues that ensure robust economic growth and development of our people and country,” he said, adding that all politicians they had met over the years would attest they never discussed personal business interests and state tenders.
“We’ve met and will continue to engage the president and deputy president of the ANC, IFP’s president, Velenkosini Hlabisa, and DA’s leader, John Steenhuisen, and all other leaders whose number-one priority is economic growth and development.”
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