ODDS AGAINST:  Gidani wants Trade and Industry Minister Rob Davies to start a new bidding process between the company and Ithuba for the issue of a new lottery licence. Picture: SUNDAY TIMES
Picture: SUNDAY TIMES

TRADE and Industry Minister Rob Davies on Wednesday defended the award of the multibillion-rand national lottery licence to Ithuba Holding in court, saying there was no risk Ithuba would be unable to sustainably run the lottery.

On Wednesday was the second day of an application before the High Court in Pretoria to set aside the eight-year lucrative lotto licence by competitor Gidani Holdings. This is the third time Gidani has been to court over the licence, first awarded to Ithuba in November 2014.

In July last year, Pretoria Judge Neil Tuchten set aside Ithuba’s licence, but gave the minister a month’s grace during which time Mr Davies re-awarded it to Ithuba. But Gidani has once again challenged the award of the licence to Ithuba, saying it was irrational.

On Wednesday, the minister’s counsel, Hamilton Maenetje SC, said there was no legal requirement that the winning applicant had to contribute the biggest percentage of its takings to the National Lottery Distribution Trust Fund. This is the fund that distributes to charities and good causes.

When it applied for the licence, Gidani had said it would contribute 34% of its sales revenue to the fund, while Ithuba offered only 27%.

But Ithuba’s financial model envisaged an invigoration of the lottery, meaning more ticket sales and ultimately more money in the trust fund. On its best-case-scenario model, Ithuba envisaged increasing sales by 145%.

Mr Maenetje said the operator’s contribution to the distribution fund was only one of the things the minister could weigh up when awarding the licence. "If there are other good reasons, the award will be rational," he said.

He added that it was not even clear that Ithuba would not contribute the same or more than Gidani to the distribution fund, as it was all based on projections.

But even if it did not, the court could not conclude that the licence award was irrational, said Mr Maenetje. What was always clear was that Ithuba was able to sustainably run the lottery.

Even if Ithuba’s best-case scenario projection was unrealistic, that was a risk the minister was entitled to take, he said. It was not a ground for a court to set aside the licence as irrational.

Mr Maenetje rejected Gidani’s argument that Mr Davies could not rationally have been satisfied that Ithuba had sufficient financial resources to run the lottery — a requirement of the Lotteries Act.

Gidani had argued that the minister took the decision the day before he received a crucial report into whether Ithuba had the financial resources to run the lottery.

But Mr Maenetje said the critical point for assessing whether Ithuba had enough money in the bank was when the tender was awarded, not when the minister decided to whom he would award the licence. The licence was actually awarded after Mr Davies had seen the report, he said.

The case will continue before Judge Billy Mothle until Friday, with argument from Ithuba expected to continue on Thursday.