A judgment by the Mbombela High Court declaring it illegal for Lottostar and Betting World to place bets on the outcome of the national lottery is a death knell for regional tourism. File picture: Oupa Mokoena
A judgment by the Mbombela High Court declaring it illegal for Lottostar and Betting World to place bets on the outcome of the national lottery is a death knell for regional tourism. File picture: Oupa Mokoena

Outlawing of bookmakers bets to cripple tourism sector

By Banele Ginindza Time of article published Sep 6, 2021

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A seismic judgment by the Mbombela High Court last week declaring it illegal for provincial bookmakers, Lottostar and Betting World, to place bets on the outcome of the national lottery is a death knell for regional tourism still recovering from extensive damage brought on by the Covid-19 pandemic, industry players have said.

The court declared that from a player’s perspective, the experience of placing bets on the outcome of lottery draws through Lottostar and Betting World is almost identical to the experience of playing the National Lottery through Ithuba, who had sought the order, creating unbeneficial competition for the national lottery which is obliged to contribute 47 percent of its annual budget to the National Lotteries Distribution Fund (NLDF), while the regional bodies were only obliged for 1.5 percent of their takings.

The court found that because of their less onerous obligations, Lottostar and Betting World were able to offer higher prize pay-outs and more regular prizes to players, giving them an unfair advantage over Ithuba, whose contributions go to NLDF-funded charities and other good causes.

The Mbombela judgment comes on the heels of a Pretoria High Court judgment in May which overturned Trade and Industry Minister Ebrahim Patel’s decision to appoint one of his own officials as acting chairperson of the National Lotteries Commission.

“For us this is unfortunate, we need as many jobs as possible. This will affect job creation in the tourism sector, thousands of jobs are on the line now. All these areas of entertainment attract thousands of tourists and this is disruptive to the recovery of the tourism sector,” Chairman of the Kruger Lowveld Tourism Association, Oupa Pilane said.

Pilane said notwithstanding the judgment, the tourism sector still advocated for an amicable resolution among the lottery operators as business had invested substantially in the infrastructure and amenities to cater for the market, which would now likely dwindle as there was less incentive for lotto players to place bets.

“Why have the legislators not foreseen this from the word go when these companies were given operational licences. A lot of investment will now be nullified, which affects the tourism sector. We are hoping for a speedy solution to be found. We still advocate for amicable discussions and engagement among the lottery operators for the sake of tourism,” he said.

Ithuba Holdings enthused last week that the judgment sends a strong signal to gaming companies that have been profiting by illegally feeding off the National Lottery.

Ithuba and the National Lotteries Commission in 2016, brought an application for a declaratory order and interdict against Lottostar. The judgment declares that the bookmaker’s practice of taking bets on the outcome of any lottery, including the South African National Lottery, is illegal.

“We welcome the judgment which reaffirms that only Ithuba as the National Lottery operator can lawfully offer bets on the lottery. ITHUBA has always been driven by the desire to offer maximum contributions towards the betterment of South Africans. Ithuba has touched many lives through its high-impact programmes and contributed over R1.8 billion to various socio-economic initiatives and good causes through lottery ticket sales,” chief executive Charmaine Mabuza said.

She said the ruling served as a wake-up call to provincial gambling regulators that the exclusive rights granted to the National Lottery Operator came with a very clear obligation to contribute to the National Lotteries Distribution Trust Fund.

“When gaming companies illegally encroach on this terrain, they are in effect siphoning off funds that contribute positively to the betterment of the South African economy,” she said, noting that the judgment, delivered by the Mpumalanga High Court of Appeal, set a precedent for Ithuba to challenge any bookmaker deriving free financial benefits through unlawfully accepting bets on the outcome of the National Lottery, and to any responsible Provincial Gambling Board to put an end to this unlawful practice.

Lottostar along with Betting World were taking bets on the outcome of the South African National Lottery and some foreign lottery draws.

Both companies relied on their bookmaker licences, issued by the Mpumalanga Gaming Board.

Mabuza said the Provincial Gambling Act does not however empower provincial gaming boards to authorise bookmakers to accept bets on the outcome of the National Lottery draws.

The High Court interdicted Lottostar from offering bets on the outcome of any lottery and directed Lottostar, the Mpumalanga Gaming Board and Betting World to pay all Ithuba’s legal costs.

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