National Lottery licence awarded to Sizekhaya Holdings amid legal disputes

Minister of Trade, Industry and Competition Parks Tau has named Sizekhaya Holdings, a consortium partly owned by gambling company Goldrush, as the next operator of the National Lottery for the next eight years.

Sizekhaya is led by KwaZulu-Natal businessmen Moses Tembe and Sandile Zungu, the owner of AmaZulu Football Club.

Last week, Judge Sulet Potterill ordered Tau to announce the bidder by May  28 and declared the decision to issue a temporary licence unconstitutional. However, to prevent lottery ticket sales from halting, Potterill suspended the order for five months, allowing a temporary licence to be awarded for that period.

Making the announcement on the court-ordered date, Tau said on Tuesday that he had intended to announce the successful bidder on the same date, provided that licence agreement negotiations were successfully concluded.

However, Tau also further said that he will seek legal advice to appeal the Pretoria High Court’s findings and orders that forced his hand to make this announcement. 

“With due respect to the Honourable High Court, my announcement fulfills my undertaking to the bidders and the Court before the hearing of the application. This concludes a long and challenging process of evaluating eight applications for the fourth licence. I appreciate that this has been an enormous and complex endeavour,” he said.

The National Lottery is currently operated by Ithuba Holdings, whose licence expires on May 31. Due to delays in announcing the successful bidder, a temporary licence awarded to Ithuba Lottery, a sister company of Ithuba Holdings, will take effect on June 1. Thereafter, Sizekhaya is expected to assume operations for eight years.

Tau has not clarified the lingering uncertainty regarding when Sizekhaya’s licence will commence, with expectations that Ithuba Holdings will operate for an additional five months until the new operator takes over.

The announcement comes as the National Lotteries Commission (NLC) launched an urgent application to amend a Johannesburg High Court order limiting the temporary licence to five months. The NLC argues that unless the order is revised to allow the temporary licence to remain valid for a full year, lottery sales will cease on Sunday, 1 June, as it would not be financially viable for Ithuba Lottery to continue.

The licence has been the subject of extensive litigation in the Gauteng High Court, initiated by one of the bidders, Wina Njalo. Wina Njalo claimed that Minister Tau favoured Ithuba by delaying the announcement and deciding to issue a temporary licence. They argued that only Ithuba had the infrastructure in place to qualify for the temporary licence.

Ithuba Holdings’ licence was previously extended for two years, making it ineligible under the Lotteries Act to receive another licence. However, a separate entity, Ithuba Lottery, which shares directors with Ithuba Holdings, also bid for the licence.

Sizekhaya’s leading bid has sparked controversy, with parliamentarians from the EFF and Build One South Africa questioning how the bid was awarded. 

Reacting to the appointment Tembe told The Mercury yesterday, “As Chairman of Sizekhaya, I can confirm that we’d use this opportunity to generate jobs and stimulate the economy. We guarantee South Africans SA Lottery would be bigger, better and exciting. We’re bringing in best in class technology never seen in our country."

Tembe is a prominent businessman from KwaZulu-Natal. He leads the vehicle setup to encourage economic growth in the region through the KZN Growth Coalition. In 1990, Tembe founded  Bellamont Investments and the Bellamont Group of Companies. This group, built on six pillars – Property Development and Construction (Afrostructures), Industrial Holdings, which includes the Geochem brand and IFS Facilities Management, Energy and Telecommunications, Mining, Gaming, and Asset Management – has managed to thrive even in tough economic times.

Zungu is a well known business personality, and one of his notable businesses is the Amazulu Football Club. In 2002, Zungu Investments Company (Zico) was established. Zico is a formidable diversified industrial holdings organisation with interests that include education, manufacturing, property, sport, forensics, gaming, and resources.

DA MP Toby Chance said the delays in announcing the preferred bidder had threatened the Lotto's entire operations.

"The announcement of Sizekhaya Holdings as the new operator of the National Lottery is long overdue, as Minister Tau waited until the 11th hour. This announcement follows a protracted process involving significant ANC connections and court litigation over the time allotted to the temporary licence operator, who must take over on 1 June while Sizekhaya gets its systems ready," said Chance.

He added that the DA will scrutinise the new operator to ensure that everything has been done above board and will continue to hold the Lotteries Commission to account in the interest of South Africans.