Court rules against Minister Parks Tau on lottery licence
Minister’s decision to delay lottery announcement was unconstitutional
The temporary licence to operate the lottery from 1 June may only be awarded for five months, the High Court in Johannesburg has ruled. Illustration: Lisa Nelson
- The Gauteng High Court has ordered Minister Parks Tau to announce the new operator of the National Lottery by 28 May.
- The court case was brought by Wina Njalo, which had bid for the lottery licence. The company accused Tau of favouring Ithuba, the current operator until 31 May, by announcing a one-year temporary licence before the new operator takes over.
- Judge Sulet Potterill said the temporary licence would inevitably go to Ithuba because it is the only company set up to operate the lottery in this timeframe.
- The temporary licence can now only be awarded for five months, after which the new licence holder will take over.
A company bidding on the licence to operate the National Lottery has won a court challenge to compel Trade Minister Parks Tau to announce the successful bidder by 28 May 2025. The court has also set aside Tau’s decision to issue a temporary licence that would “inevitably” go to the “sister company” of the current licence holder.
The current licence is held by Ithuba Holdings but it expires on 31 May. Tau has delayed announcing the new licence holder. When it became clear that the new operator would not be able to take over on 31 May, Tau said that he would issue a one-year temporary licence, after which a new operator would be appointed for the next eight years.
Wina Njalo, one of the bidders for the licence, took the matter to the Gauteng High Court in Johannesburg, accusing the minister of favouring Ithuba by enabling it to operate for another year.
In its urgent application, Wina Njalo argued that only Ithuba, as the lottery operator for the past ten years, had the necessary infrastructure to be eligible for the temporary licence.
Under the Lottery Act, Ithuba cannot receive the licence again. But Ithuba Lottery, a separate company that shares directors with Ithuba Holdings, did bid on the licence. Ithuba Lottery, in its court papers, admits it intends to take over the assets of Ithuba Holdings and its technology partner to operate the temporary licence if its bid is successful.
Wina Njalo had also complained in its application that the minister had refused to provide reasons for delaying the award of the eight-year licence.
In opposing the application, the minister said he intended to announce the new lottery provider by 28 May, but could not commit to it. The court’s ruling now compels him to announce it by the deadline, unless he appeals the ruling.
Judge Sulet Potterill also set aside the minister’s decisions to issue a request for proposals for a one-year temporary licence and to extend the bid validity of the main licence for another year.
But the order declaring the temporary licence invalid was suspended for five months, meaning that the licence can still be granted, but only for five months, after which the new licence holder must take over.
Tau, in his opposition, had said the process of the award of the licence was “extremely complex”.
“In the past, serious allegations of corruption were made in respect of the National Lotteries Commission and the way the lottery was managed. These considerations prompted me to take a very cautious approach,” the minister said. He denied that he was favouring Ithuba.
In her judgment handed down on Wednesday, Judge Potterill said while she understood the award of the licence was complex and of national importance, the minister had not fulfilled his constitutional duty and must, at the very least, provide reasons for the delay.
“He simply has not,” she said, noting that he had not even advanced reasons, other than unspecified “concerns”, in his affidavit before the court.
The minister was also bound by the constitutional value of transparency. The non-decision, she said, must be declared invalid.
Regarding the temporary licence, she said she accepted that it was not financially viable for any bidder to obtain the funds to run a temporary licence for a period of 12 months unless it had already run the lottery.
She also accepted that no entity would obtain the finances from financial institutions without the licence agreement being signed.
She said that Ithuba was “most certainly” favoured in the process, even if it was not the minister’s intention.
“A tender process cannot have an inevitable outcome or be foreseeable. This is crucial for ensuring fairness, transparency and adherence to procurement laws. On this ground alone, the temporary licence must be declared to be invalid.”
She said Ithuba Lottery was the “sister company” of Ithuba Holdings even if they were distinct legal entities.
“A court cannot turn a blind eye to the fact that with seven of the same directors, the operation of the lottery is well known to both Holdings and the newly activated Ithuba Lottery.”
She said “the chances were slim” that the Ithuba Lottery would not secure the temporary licence.
But it was also common cause that the interruption of the national lottery would create a situation where reserve funds would have to be used to fund good causes or funding might dry up, Judge Poterrill said.
For this reason she believed it was just and equitable to suspend the invalidity of the temporary licence for five months.
“I am unconvinced that a period of 12 months is necessary.”
She ordered that Wina Njalo’s costs be paid by the minister, the National Lotteries Commission and Ithuba Lottery.
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