Britain’s huge cash bonanza shows how a lottery can help South Africa, but the local wheels of fortune fail to spin
Ann Eveleth
SOUTH AFRICA’S first national lottery – which is expected to make a major contribution towards dealing with the government’s financial troubles – is now only expected to be launched by mid-1998 at the earliest.
The delays are causing some frustration among foreign corporations keen to run the lottery. Debate on the draft National Lotteries Bill is only expected to take place next month, and the government still has to appoint a consultant to study the “nuts and bolts” of the operation -about four years after the idea was first mooted.
Britain took just two-and-a-half years to get its hugely successful lottery off the ground. In the first 18 months of its operation it has raked in R7-billion in taxes and R15,4-billion for charity and other “good works”.
Public hearings are expected next year for the appointment of a South African National Lotteries Board and tenders for the lucrative contract to operate the lottery on behalf of the government will only open in late 1997.
While some industry sources say they have lost interest in the lengthy process, the delays appear to have merely intensified the interest of leading bidders, who have begun actively lobbying officials connected to the operation even before the public debate has officially opened.
Other industry observers say vested interests could be behind the delays. They suspect some players in the gambling world – in particular the horse-racing industry – have been trying to postpone the creation of a lottery, having learnt from the experiences of the British pools operators who lost hugely to the British lottery.
African National Congress MP Llewellyn Landers told the Mail & Guardian he and other members of the parliamentary ad-hoc committee on gambling and lotteries he chairs had been approached by legal representatives of several companies interested in bidding for the exclusive right to operate what is expected to be a multi-billion rand enterprise: “People call us up and invite us to lunch or cocktail parties, hoping to give us a presentation, even though we have nothing to do with the selection of the lottery operator.”
Landers said he had invited interested parties to address the entire committee during public hearings on the draft Bill, which may be held early next month. The pressure by companies hoping to stake a claim on the exclusive contract had become so great, however, that invitations to the debate had to include a request that parties restrict their submissions to the content of the legislation. “We don’t want to be hearing bids in Parliament,” he said.
Alistair Ruiters, the Trade and Industry Department chief director who inherited the lottery process from former provincial and constitutional affairs minister Chris Fismer when the National Party left the government, said his department had tried to expedite the “complicated process”, but that extensive consultations were required at each stage of the process. Time had also been spent raising money to pay the consultant who would soon be hired to “study the nuts and bolts of the operation” in advance of the bidding process.
Ruiters declined to comment on the potential bidders, but admitted that “conservative estimates” suggesting the lottery could generate about R2-billion annually and had drawn international interest.
Industry sources predict a fierce contest between “five or six” local and international contenders. The South African Postal Service and Games Africa are expected to lead the local bids, while United States- based firms GTECH and International Lottery Totalizator Systems (ILTS) have been tipped as leading international contenders.
A British and a French firm are also reportedly interested in the bid, although this could not be confirmed at the time of publication.
Most post offices already sell scratch cards and the lottery operation would be a lucrative feather in the service’s recently commercialised cap.
Games Africa has been laying the groundwork for the lottery since its 1992 R17-million launch as the dominant force in the national scratch-card industry with the Ithuba and Viva cards.
While the Lotteries Bill provides for government ownership of the lottery – whose proceeds will fund the Reconstruction and Development Programme, charities, sports and recreation, arts and culture, and various other projects – companies bidding for the operating contract expect their percentage payout will offer a healthy profit beyond the cost of providing and installing hundreds of on-line machines and managing the venture.
Issues ranging from efficiency to affirmative action will dominate the tender process, but the key question of which company can generate the largest proceeds may see international firms giving local contenders a run for their money. Both GTECH and ILTS say they are likely to form local partnerships.
Last week Virgin Group chairman Richard Branson told the M&G he believed South Africa should avoid handing the lottery operation over to a private company, but should rather appoint a chief executive to maximise earnings for public projects.