Despite the court setting aside the process that led to Sizekhaya Holdings being awarded South Africa’s lucrative National Lottery licence, the operator is making a commercial, rather than legal, argument for survival.
It is positioning itself as the safest pair of hands to maintain uninterrupted lottery operations while Trade, Industry and Competition Minister Parks Tau decides whether a fresh assessment should leave it in control.
Last week, the Pretoria High Court set aside Tau’s decision to award the licence to Sizekhaya, finding flaws in the decision-making process and ordering the minister to conduct a new reconsideration.
The ruling overturned the award of the fourth National Lottery and Sports Pools Licence to Sizekhaya Holdings.
Flaws in tender process
In the judgment, the court declared invalid the decision to award the licence to Sizekhaya and the licence agreement concluded between Tau, the National Lotteries Commission (NLC) and the preferred bidder.
Judge Norman Davis found flaws in the tender process. The court ruled that the government relied on an illegal review process that re-evaluated bids outside the original tender rules. A ministerial committee established after the evaluation process introduced additional assessment criteria, reassessed bidders and ultimately recommended Sizekhaya, despite the Ringeta Consortium being the highest-ranked bidder. The court concluded that this resulted in a procedurally unfair process.
Court order suspended
While declaring the licence award invalid, the court suspended its order to prevent disruption to lottery operations and funding for charities and other good causes.
The six-month suspension gives Tau an opportunity to reconsider the licence award and make a new determination. The court also ordered the NLC and Sizekhaya to pay the legal costs of unsuccessful bidders Ithuba Lottery RF and Ringeta Consortium RF.
However, the judgment stopped short of finding fault with the operator, its financial standing or its ability to run the lottery.
Sizekhaya’s response
In a response to Sunday World after the ruling, Sizekhaya said the court’s concerns centred on the process followed by the minister rather than on the merits of its bid.
“The judgment did not find that Sizekhaya’s bid was defective, nor did it find that we lacked the financial resources, operational capability or suitability to manage the National Lottery,” Sizekhaya chief executive Fundi Sithebe said.
That distinction could prove critical in the next phase of the battle. While rival bidders are expected to focus on the shortcomings the court identified, Sizekhaya will probably emphasise its operational performance since assuming control of the lottery on June 1.
“We stand by the strength of our bid … It combined proposals to modernise the National Lottery with a clear understanding of South African players and the local market. It also set out our commitment to increasing the National Lottery’s contribution to good causes so that more funding reaches beneficiaries.”
She reiterated that the court’s criticism was directed at the process that led to the award rather than the substance of Sizekhaya’s bid.
“The court’s concerns related to the process followed by the minister in reaching the final decision. The judgment did not find that Sizekhaya’s bid was defective, nor did it find that we lacked the financial resources, operational capability or suitability to manage the National Lottery.”
Ticket sales and funding unaffected
More significantly, however, Sithebe repeatedly pointed to the company’s current stewardship of the lottery, saying ticket sales, draws, prize payments and beneficiary funding continue uninterrupted.
“Ticket sales, draws and prize payments continue as normal. It is business as usual for us in ensuring that contributions to the country’s largest philanthropic engine are not compromised,” she said.
Industry observers say the reconsideration process may ultimately hinge on whether government believes the risks associated with changing operators outweigh any benefits of selecting an alternative bidder.
Complex national lottery operation
Sizekhaya appears to be building that argument.
Sithebe highlighted the complexity involved in managing a national lottery operation, citing extensive technology systems, financial infrastructure, retail networks, regulatory requirements and relationships with thousands of stakeholders.
“Transferring the operations of a national lottery is a complex undertaking. It involves significant technology infrastructure, financial systems, retail networks, regulatory processes and relationships with thousands of stakeholders,” she said.
“This is why continuity and stability are so important.”
Since the judgment, Sizekhaya has continued to engage with the Department of Trade, Industry and Competition and the National Lotteries Commission in the ordinary course of business, but Sithebe said the company had no update to share on any engagements specifically related to the reconsideration process.
The court order provides for an initial six-months for the minister to reconsider the licence award.
Sithebe said Sizekhaya would respond to any requests for information or clarification during that process.
- The Pretoria High Court set aside the decision to award South Africa’s National Lottery licence to Sizekhaya Holdings due to flaws in the tender process, ordering a new reconsideration by Minister Parks Tau.
- The court found the government relied on an illegal review process that introduced new criteria after the original tender, resulting in a procedurally unfair process favoring Sizekhaya over the highest-ranked Ringeta Consortium.
- Despite invalidating the licence award, the court suspended its order for six months to prevent disruption to lottery operations and allowed Minister Tau time to reconsider the award.
- Sizekhaya stated that the court did not find its bid defective nor question its financial resources, operational capability, or suitability to manage the National Lottery.
- Sizekhaya continues to operate the lottery normally since June 1, maintaining ticket sales, draws, prize payments, and funding to beneficiaries without interruption.
Despite the court setting aside the process that led to Sizekhaya Holdings being awarded South Africa’s lucrative National Lottery licence, the operator is making a commercial, rather than legal, argument for survival.
It is positioning itself as the safest pair of hands to maintain uninterrupted lottery operations while Trade, Industry and Competition Minister Parks Tau decides whether a fresh assessment should leave it in control.
Last week, the Pretoria High Court set aside Tau’s decision to award the licence to Sizekhaya, finding flaws in the decision-making process and ordering the minister to conduct a new reconsideration.
The ruling overturned the award of the fourth National Lottery and Sports Pools Licence to Sizekhaya Holdings.
In the judgment, the court declared invalid the decision to award the licence to Sizekhaya and the licence agreement concluded between Tau, the National Lotteries Commission (NLC) and the preferred bidder.
Judge Norman Davis found flaws in the tender process. The court ruled that the government relied on an illegal review process that re-evaluated bids outside the original tender rules. A ministerial committee established after the evaluation process introduced additional assessment criteria, reassessed bidders and ultimately recommended Sizekhaya, despite the Ringeta Consortium being the highest-ranked bidder. The court concluded that this resulted in a procedurally unfair process.
While declaring the licence award invalid, the court suspended its order to prevent disruption to lottery operations and funding for charities and other good causes.
The six-month suspension gives Tau an opportunity to reconsider the licence award and make a new determination. The court also ordered the NLC and Sizekhaya to pay the legal costs of unsuccessful bidders Ithuba Lottery RF and Ringeta Consortium RF.
However, the judgment stopped short of finding fault with the operator, its financial standing or its ability to run the lottery.
In a response to Sunday World after the ruling, Sizekhaya said the court’s concerns centred on the process followed by the minister rather than on the merits of its bid.
“The judgment did not find that Sizekhaya’s bid was defective, nor did it find that we lacked the financial resources, operational capability or suitability to manage the National Lottery,” Sizekhaya chief executive Fundi Sithebe said.
That distinction could prove critical in the next phase of the battle. While rival bidders are expected to focus on the shortcomings the court identified, Sizekhaya will probably emphasise its operational performance since assuming control of the lottery on June 1.
“We stand by the strength of our bid … It combined proposals to modernise the National Lottery with a clear understanding of South African players and the local market. It also set out our commitment to increasing the National Lottery’s contribution to good causes so that more funding reaches beneficiaries.”
She reiterated that the court’s criticism was directed at the process that led to the award rather than the substance of Sizekhaya’s bid.
“The court’s concerns related to the process followed by the minister in reaching the final decision. The judgment did not find that Sizekhaya’s bid was defective, nor did it find that we lacked the financial resources, operational capability or suitability to manage the National Lottery.”
More significantly, however, Sithebe repeatedly pointed to the company’s current stewardship of the lottery, saying ticket sales, draws, prize payments and beneficiary funding continue uninterrupted.
“Ticket sales, draws and prize payments continue as normal. It is business as usual for us in ensuring that contributions to the country’s largest philanthropic engine are not compromised,” she said.
Industry observers say the reconsideration process may ultimately hinge on whether government believes the risks associated with changing operators outweigh any benefits of selecting an alternative bidder.
Sizekhaya appears to be building that argument.
Sithebe highlighted the complexity involved in managing a national lottery operation, citing extensive technology systems, financial infrastructure, retail networks, regulatory requirements and relationships with thousands of stakeholders.
“Transferring the operations of a national lottery is a complex undertaking. It involves significant technology infrastructure, financial systems, retail networks, regulatory processes and relationships with thousands of stakeholders,” she said.
“This is why continuity and stability are so important.”
Since the judgment, Sizekhaya has continued to engage with the Department of Trade, Industry and Competition and the National Lotteries Commission in the ordinary course of business, but Sithebe said the company had no update to share on any engagements specifically related to the reconsideration process.
The court order provides for an initial six-months for the minister to reconsider the licence award.
Sithebe said Sizekhaya would respond to any requests for information or clarification during that process.
