Business Maverick

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Tata ma lottery license, tata ma billions

Earlier this month the Department of Trade and Industry issued a Request for Proposals (RFP) to operate the Third National Lotteries License. It is, however, a high-stakes bidding game. The estimated value of the tender is R40 billion. By JESSICA EATON.

“Some of our funds go to breakfasts like these,” joked Prof. Alfred Nevhutanda, Chairperson of the National Lotteries Board, as members of the media gathered around a large conference table laden with food on Tuesday morning. The South African National Lotteries Board met with press at the Hyatt hotel in Rosebank to explain what makes this particular license different, while explaining as well who exactly benefits from the billions garnered by the Lotto.

Although the next successful National Lottery License will only begin operations in June, the tender, or RFP for the third National Lottery License, has already been issued, and it has not been short of discussion.

The tender, however, is not available for just anyone to see. A copy of the official document costs a cool R50,000. Though Tuesday morning’s press briefing was an attempt to make one of South Africa’s biggest and most complicated businesses more accessible to the public, total transparency, or “the whole truth,” is only available to those with the big bucks. And R50,000 is only the entry fee. So far, only six “entities” (who cannot be named) can afford the additional fee of R2.5 million to submit a bid. All bidders must also have at least R125 million to support their candidacy in the form of a bank-guaranteed cheque.

There is also, however, a lot of money to be made. Last year, the National Lottery raked in a healthy R5 billion in revenues.

Where does all that money go and who benefits from this massive business?

Contrary to popular belief, only a small portion of it is actually allocated to prize money. According to Prof. Nevhutanda, 45% of the revenue goes to “good causes”. The bulk of money is diverted to arts and culture, sports and recreation and charities. Another ambiguous beneficiary, titled “miscellaneous,” receives a relatively small amount of money. When asked what type of beneficiaries the “miscellaneous” category might include and what kind of activities they spend their money on, Prof. Nevhutanda hesitated and then said, “disaster or emergency projects”. One such group who benefited from the miscellaneous fund was the national soccer team. In the lead-up to the 2010 World Cup, this fund paid for Bafana Bafana to train abroad when all local facilities were occupied by international teams.

It is the apparent public inaccessibility of the miscellaneous fund that is problematic. The official National Lotteries Board website lists beneficiaries of the major three funds, but lists no beneficiaries of the miscellaneous fund. Although this fund is small in comparison to the others, the 5% of the funds it does receive amounts to millions. While Prof. Nevhutanda did admit that not many people were aware of the miscellaneous fund and who is supposed to benefit, nor too how to apply for funding, he did assure journalists that the board would make more of an effort to publicise it.

He was quick to state that while this is exactly the aspect of lottery management that the public is most interested in, “it is not the National Lotteries Board’s core function. Its primary function is the regulation and management of the National Lottery,” he said. Prof. Nevhutanda underlined his priorities by saying, “We are a business, not a charity.” He conveniently told the audience that it is in fact “independent distributing agencies” who are responsible for ensuring that the funds are allocated to the deserving do-gooders and that his responsibilities ended with raising money and regulating it.

It is not only Prof. Nevhutanda’s board which has two distinct functions, management of funds and the distribution thereof. The man himself has two distinct functions. When he is not managing the NLB, he is a “serious preacher,” blaming his rusty Tuesday voice on his Sunday job. Though it is clear he does not want anyone to think philanthropy is his weekday game, he wasted no time in making the audience aware of his charitable endeavors on the weekends.

Prof. Nevhutanda is very serious about his job. So serious that he went on a world tour to better understand how lotteries are run elsewhere, visiting The United States, The United Kingdom, France and Australia. While he clearly thinks the South African NLB has much to gain from international best practice, he is also a strong proponent of localisation. The third National Lottery license should be an “African License” he said, and so “the current tender or envisaged license differs from the first and the second in four ways.”

He said, “This proposal seeks to encourage the next operator to have a greater emphasis on localisation.” The incoming operator must also use “existing infrastructure” and be a credible BEE company. The proposal “seeks to increase state participation” in the National Lottery.

Nevhutanda said, “In a few more years we might see the state running the Lottery, and perhaps it will remove the common story that the NLB is full of corrupt people because when they distribute their funds to their friends or whatever.”

He added, however, that ultimately it would be the public who decided “whether or not to take business away from the businessmen and -women.” DM

Read more:

  • Draft Lotteries Amendment Bill: Gambling with the future of SA civil society? In Daily Maverick