Minister Davis promises to be strict on lotto hopefuls

SA National Lottery
SA National Lottery

Cape Town – The application process for the R40 billion third lottery operating licence will be the most scrutinised yet, the Minister of Trade and Industry Rob Davies said today.

“We want to make sure we have an uninterrupted transition, that’s what we’re saying. So that means we have to be very very careful that at every step along the way we act very strictly according to the act so that we are not vulnerable to all litigious processes afterwards,” he said.

Davies last week gazetted a Request for Proposals for the third lottery license, which will run for a period of seven years.

Requests for Proposal will close on November 30, with winning bid to be announced in August next year.

The new operator will commence operations on June 1, 2015, after the present lottery operator Gidani’s licence period expires at the end of May 2015.

Davies said he did not want to see a repeat of the last bid in which the high court in 2007 initially set aside the then minister of trade and industry Mandisi Mpalhwa’s awarding of the Lottery operating licence to Gidani.

This left the country without a lottery for six months, before the operator attended to the deficiencies identified by the court and the Minister reawarded the license.

Davies stressed that the next licence operator would have to ensure higher levels of localisation, pointing out that the department would for example be looking at those applicants who were able to manufacture lottery machines in South Africa.

In examining proposals, he said the department would look at outlets and companies that are providing services to the applicant, when assessing each applicant’s level of Black Economic Empowerment (BEE).

In the awarding of the third operating licence, Davies said the state would retain its 20% stake in the operating license.

At present the National Empowerment Fund (NEF) and Post Office each have a 10% stake.

As part of the new bid, applicants would have to also commit a percentage of revenue to the National Lottery Distribution Trust Fund.

Gidani currently commits about half of the revenue to paying prizes, 34% of its revenue goes to the National Lottery Distribution Trust Fund, making the trust fund the largest single contributor to non-profit organisations.

Davies pointed out that since he took office in 2009, the record of the fund had been much improved.

Most of the monies already collected were now being allocated, while the lotteries board has also sourced new applicants, he said.

The new Lotteries Bill provided for, among other things, that full time distribution agencies be appointed in place of part-time distribution agencies and that bureaucratic requirements for applicants would be lightened to allow for entities to apply at any time for lottery funding.

The chairperson of the National Lotteries Board Professor Ntshengedzeni Nevhutanda said since 2000 the National Lotteries Board had collected R16 billion in revenue of which R15 billion had so far been distributed.

Allocations are made in tranches to entities, in line with their performance.

Nevhutanda said the board had run roadshows and workshops, which had helped to raise interest in the National Lottery Distribution Trust Fund such that requests from entities recently totalled R72 billion, against the maximum available funds per year of R1.7 billion.

He said to ensure transparency the application process would have to be hand delivered during a three-hour submission period, between 7am to 10am on November 30.

The request for proposal document is available at a fee of R50 000 from the National Lotteries Board and
Nevhutanda said two companies had already purchased the documents.

To submit bid documents bidders must make a non-refundable payment of R2.5 million – R500 000 more than the previous lotteries bidding process.

Davies said the non-refundable deposit will help cover the costs entailed in the bid process, including audit and other costs. –