Concerns mount over South Africa government’s state-run lottery plan
Opponents warn that a state-run lottery could lead to corruption and inefficiencies, given the track record of financial mismanagement at various parastatals and government entities.
South Africa.- The government’s plan to scrap private lottery management in favour of a state-run national lottery has raised red flags among critics who fear the potential impact on the industry.
In 2034, when the new private operator contract expires, the South African government intends to bring the national lottery under state control. The details of this plan were outlined in a Request for Proposals (RFP) for the latest licence awarded to Sizekhaya Consortium.
As part of its agreement, the Goldrush-backed consortium has also pledged to transfer its intellectual property to the government when its eight-year licence term ends.
A nationalised lottery will see the government assume control over the entire operation, including game design, marketing, distribution and revenue allocation. The concept is not new in South Africa. It was first proposed in a 2013 amendment to the Lotteries Act, but was never put into practice.
According to Jodi Scholtz, commissioner of the National Lotteries Commission (NLC), the provision for a state-run national lottery in the amendment was partly a response to the 2007 disruption, when a court case left the country without a lottery operator for several months.
The matter was also thoroughly discussed by the trade and industry committee in the last parliament. Supporters of a state-run lottery argue that it would curb profiteering by the licence holder. However, MPs against the idea expressed concerns that due to the corruption in state entities, funds meant for good causes might be misused, a view shared by other critics of the nationalisation plan.
High risk of corruption
Opponents warn that a state-run lottery could lead to corruption and inefficiencies, given the track record of financial mismanagement at various parastatals and government entities.
Mat Cuthbert, a member of the Democratic Alliance who was instrumental in uncovering corruption within the NLC in the previous administration, said: “At the time, the NLC only had access to approximately 34% of all revenue generated by the National Lottery, housed under the NLDTF (National Lottery Distribution Trust Fund.) One can only imagine how much more public funding would have been stolen had they had access to the approximately R7-billion generated in ticket sales revenue per annum.”
Professor Alex van den Heever from the Wits School of Governance noted that the concentration of appointment powers in the hands of the Minister of Trade, Industry and Competition creates a high risk of corruption in a state-run lottery.
He pointed out that the proposed approach does not address the governance flaws, and the minister’s unchecked discretion could lead to corruption and overreach. Parks Tau, the current SA minister of trade, industry and competition, has been subject to various lawsuits over his decisions, especially regarding the awarding of the national lottery licence. Most critics accuse him of favouritism and lack of transparency in the licensing process.
