Court exposes unlawful process behind Sizekhaya's lottery windfall

Trade, Industry and Competition Minister Parks Tau secretly introduced an additional evaluation process that overturned the original rankings of lottery licence bidders and paved the way for Sizekhaya Holdings to secure the national lottery licence.

The Gauteng High Court in Pretoria has now declared that process unlawful and procedurally unfair, setting aside Tau's decision to award Sizekhaya the Fourth National Lottery and Sports Pools Licence.

In a judgment delivered on Monday, 2 November, Judge Neil Davis also declared invalid the licence agreement between Sizekhaya, Tau and the National Lotteries Commission (NLC).

At the centre of the dispute was a Ministerial Committee appointed by Tau on 26 January 2025 to reassess the competing bids and recommend preferred and reserve bidders.

The problem was that the original request for proposals (RFP), which established the rules governing the competition, made no provision for such a committee or a second evaluation process.

Davis found that bidders had been subjected to an additional process without their knowledge, with different weightings applied to the criteria they had originally been told would determine the outcome.

"On the face of it then, the unilateral insertion of a further process, namely a re-evaluation of everything that had gone before by another body, in this case the Ministerial Committee, would be procedurally unfair," Davis said.

The judge rejected Tau's argument that the committee had merely advised him on the existing evaluation reports.

Instead, it conducted an entirely new assessment, using different consultants and producing new rankings and recommendations.

"It was not required to look at or consider the reports put before the Minister and to advise him thereon, it was required to re-evaluate all the scoring criteria, which it did," Davis said.

He added that Tau subsequently adopted the committee's recommendations, with his reasons for selecting Sizekhaya frequently following the committee's recommendations "word for word".

The judge described the exercise as a complete re-evaluation process operating under criteria that had been unilaterally assessed.

"The Minister's assertion that these criteria were 'drawn down' from the RFP cannot hold water," he said.

Davis, however, stopped short of finding that Tau had abdicated his decision-making responsibilities to the committee.

"I accept the Minister's bona fides and will not go as far as to find that he had abdicated his decision-making power to the Ministerial Committee or that he had improperly followed its lead," he said.

But he found that creating and using a committee not contemplated by the RFP amounted to an unlawful and procedurally unfair exercise of the minister's powers.

The original evaluation process placed Ringeta Consortium at the top of the race, with 73.92 points.

Sizekhaya finished second with 72.95 points, followed by Wina Njalo on 72.64 and Ithuba Lottery on 72.04.

The NLC's adjudication committee subsequently recommended Ringeta as the preferred bidder and Sizekhaya as the reserve bidder.

Tau's Ministerial Committee produced a different outcome.

It recommended Sizekhaya as the preferred bidder and Ithuba as the reserve bidder.

On 28 May 2025, Tau announced Sizekhaya as the successful bidder.

Explaining his decision, Tau described the competition as a close race and said Sizekhaya had "pipped the others to the post".

He also praised its bid as well-balanced, saying it satisfied the requirements of section 13 of the Lotteries Act and had an impressive technology partner.

That decision must now be reconsidered.

Davis ordered Tau to disregard the Ministerial Committee's report and recommendations when making a fresh decision on the licence.

The court did not, however, order an immediate shutdown of the lottery.

Instead, it suspended the invalidity order for two successive six-month periods.

The first gives Tau six months to reconsider the award. The second allows for a new licence agreement and handover should Sizekhaya lose the competition.

Davis said an immediate interruption of lottery operations would harm organisations and beneficiaries dependent on lottery funding.

"If the suspension remedy is not granted, the public interest will be adversely and irremediably affected. Old-age homes, children's homes and the like all depend on this expenditure to fulfil their functions in the public interest," he said.

The judgment also raised serious questions about the NLC's quality assurance processes.

Both quality assurance exercises took place after the commission had already submitted its evaluation report to Tau.

Davis said the timing of the second exercise, conducted by the Quality Assurance Committee (QAC), was particularly troubling because the RFP had expressly contemplated that assessment.

"What is however more astounding (the Minister labelled it 'perplexing') is that the second quality assurance evaluation which the RFP contemplated, being the one performed by the QAC with members appointed by the Minister, also took place after the NLC's report had already been delivered to the Minister," he said.

The QAC had recommended that either Ringeta or Sizekhaya, whichever emerged victorious, undertake not to fund political parties.

Davis found no indication that Tau had seriously considered the recommendation.

He said the minister would have to consider it when making his fresh decision.

Ringeta's bid also attracted scrutiny over its ownership structure and political connections.

Its shareholding runs through Thebe Investment Consortium, which is 70% owned by the Batho Batho Trust.

ANC MP Dr Sibongiseni Dhlomo is a trustee of the trust.

In his reasons for selecting Sizekhaya, Tau referred to IEC declarations showing that the trust had donated R15 million to the ANC on each of four occasions between December 2021 and April 2024.

Tau said he had obtained a legal opinion from senior counsel that found a contravention of the Lotteries Act in Ringeta's case.

However, the court pointed out that the opinion had never been produced despite numerous requests for it.

"Notably, despite numerous requests therefor, the opinion was never produced as part of the record or the papers before court," Davis said.

Tau maintained that he had not excluded Ringeta for political reasons, arguing instead that its projected contributions to the National Lottery Distribution Trust Fund were lower than Sizekhaya's.

Ithuba also challenged Sizekhaya's financial arrangements, arguing that the company had not secured fully committed funding when it was awarded the licence.

Davis dismissed that challenge, finding that Tau had been satisfied with the funding arrangements despite the associated risks.

He said the minister's decision on that aspect was neither irrational nor unreasonable.

The EFF, which joined the litigation, sought a broader interpretation of section 13(2)(b)(iv) of the Lotteries Act to prohibit indirect financial interests involving political office-bearers, rather than limiting the prohibition to direct interests.

Davis rejected the request, saying the RFP already extended the prohibition to indirect financial interests.

"It is surely within the ambit of Parliament to broaden the scope of section 13(2)(b)(iv) in the manner suggested by the EFF. Must this court then tread on legislative powers?" he said.

The party had also relied on reporting by amaBhungane concerning Khumo Bogatso, the sister of Deputy President Paul Mashatile's wife, who is a director and co-owner of Bellamont Gaming.

Bellamont is a minority shareholder in Sizekhaya.

The judgment noted that the EFF had made clear it was not accusing anyone of wrongdoing.

Tau had previously asked the NLC to investigate Sizekhaya's political connections following the reports.

However, Davis noted that no investigation report had been placed before the court by the time the matter was heard.

Sizekhaya has previously dismissed suggestions of links to Mashatile as gossip and conspiracy theories.

The EFF's challenge was unsuccessful, and it was ordered to pay its own legal costs.

Tau, the NLC and Sizekhaya were ordered to pay the legal costs of Ithuba and Ringeta, including the costs of senior counsel.

The case was heard on 3 July 2026.

Ithuba Holdings operated the national lottery from June 2015. Its sister company, Ithuba Lottery, launched its legal challenge on 4 July 2025.

In November 2025, Judge Ronel Tolmay dismissed Ithuba Lottery's urgent application to prevent Sizekhaya from taking over the lottery while the main review proceedings continued.

Tolmay found that the review court could still provide adequate relief.

Sizekhaya subsequently took over lottery operations from Ithuba in June 2026.

The latest judgment also points to a recurring problem in the lottery licensing system: every previous licence has ended in litigation.