NICHOLAS WOODE-SMITH: End the monopoly and allow private lotteries
The national lottery is a gold mine and serves only to centralise the potential for corruption
16 October 2024 - 05:00
byNicholas Woode-Smith
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Trade, industry & competition minister Parks Tau. Picture: JEFFREY ABRAHAMS/GALLO IMAGES
Trade, industry & competition minister Parks Tau has postponed the process of awarding a new national lottery operator licence indefinitely after the National Lottery Commission missed the October 8 deadline to finalise the matter.
The tendering process has been fraught with the usual underhanded cadre deployment, corruption and lack of transparency that characterises government in SA. A whole menagerie of ANC-connected organisations have put in bids to take over the multibillion-rand enterprise, while South Africans have been left in the dark.
According to GroundUp, fraud amounting to hundreds of millions of rand has been uncovered since 2018, and this is just the tip of the iceberg. The National Lotteries Commission is a gold mine for the corrupt as millions of South Africans flock to buy tickets with the slim hope of winning a fortune. Corrupt officials don’t like those odds, so they just steal whatever isn’t nailed to the floor.
It is clear that the commission needs to reform how it chooses and regulates its partners and operators. It is dangerous for a country as corrupt as SA to have that much money sitting so close to greedy, dishonest hands. Centralising lotteries as a concept under the government has served only to maximise the potential for corruption.
In terms of current legislation under the Lotteries Act private lotteries are severely restricted, so much so that they do not exist as anything more than a tiny pastime at festivals. The total value of the prize may not exceed R10,000, the number of tickets that can be sold is restricted, and the price of tickets may not exceed R10. On top of this, promotions and operation of competitions is heavily restricted.
The popularity of the national lottery proves that there is a demand among hard-pressed South Africans for such a concept. But in SA today those who buy lottery tickets are likely funding corruption rather than charities or general social development.
Private lotteries need to be deregulated and allowed. Why should a private company, charity or institution be denied the right to participate when the government monopoly is crooked? Additional private lotteries, operated on a large scale, could help produce large amounts of money for charity and community development, and even provide seed capital for small businesses.
Objections that lotteries enable gambling, and that gambling is morally bad, are not sufficient to deny the need for private lotteries. Individuals who want to gamble are going to do so anyway. And making petty moral decisions on behalf of others erodes individual freedom. Trading on the stock market can be no different from gambling. Applying to work at one business over another is a gamble.
The lottery and other forms of gambling have published odds and risk factors that are available to those willing to read them. It is not the fault of the institution and the industry that many people do not get informed.
That gambling has known negative effects on some individuals and families is an inevitability. Like smokers, drug addicts and drinkers, gambling is a vice that people won’t quit. They’ll just engage in illicit forms that are far more dangerous, and more likely to be rigged against them.
What is required is a trustworthy gambling industry that allows those who want to gamble to take an informed risk with their money. The money they lose — and most will — must be redistributed to deserving recipients. Even the money earned by profitmaking operators would at least be invested in businesses that create jobs and grow the economy.
It is arbitrary and nonsensical to restrict the establishment of private lotteries while the government lottery is a hotbed of corruption. Deregulate private lotteries and allow society to reap the positive benefits of inevitable gambling, and we will see our economy grow, unemployment diminish and the country become the better for it.
• Woode-Smith, a political analyst, economic historian and author, is an associate of the Free Market Foundation. He writes in his personal capacity.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
NICHOLAS WOODE-SMITH: End the monopoly and allow private lotteries
The national lottery is a gold mine and serves only to centralise the potential for corruption
Trade, industry & competition minister Parks Tau has postponed the process of awarding a new national lottery operator licence indefinitely after the National Lottery Commission missed the October 8 deadline to finalise the matter.
The tendering process has been fraught with the usual underhanded cadre deployment, corruption and lack of transparency that characterises government in SA. A whole menagerie of ANC-connected organisations have put in bids to take over the multibillion-rand enterprise, while South Africans have been left in the dark.
According to GroundUp, fraud amounting to hundreds of millions of rand has been uncovered since 2018, and this is just the tip of the iceberg. The National Lotteries Commission is a gold mine for the corrupt as millions of South Africans flock to buy tickets with the slim hope of winning a fortune. Corrupt officials don’t like those odds, so they just steal whatever isn’t nailed to the floor.
It is clear that the commission needs to reform how it chooses and regulates its partners and operators. It is dangerous for a country as corrupt as SA to have that much money sitting so close to greedy, dishonest hands. Centralising lotteries as a concept under the government has served only to maximise the potential for corruption.
In terms of current legislation under the Lotteries Act private lotteries are severely restricted, so much so that they do not exist as anything more than a tiny pastime at festivals. The total value of the prize may not exceed R10,000, the number of tickets that can be sold is restricted, and the price of tickets may not exceed R10. On top of this, promotions and operation of competitions is heavily restricted.
The popularity of the national lottery proves that there is a demand among hard-pressed South Africans for such a concept. But in SA today those who buy lottery tickets are likely funding corruption rather than charities or general social development.
Private lotteries need to be deregulated and allowed. Why should a private company, charity or institution be denied the right to participate when the government monopoly is crooked? Additional private lotteries, operated on a large scale, could help produce large amounts of money for charity and community development, and even provide seed capital for small businesses.
Objections that lotteries enable gambling, and that gambling is morally bad, are not sufficient to deny the need for private lotteries. Individuals who want to gamble are going to do so anyway. And making petty moral decisions on behalf of others erodes individual freedom. Trading on the stock market can be no different from gambling. Applying to work at one business over another is a gamble.
The lottery and other forms of gambling have published odds and risk factors that are available to those willing to read them. It is not the fault of the institution and the industry that many people do not get informed.
That gambling has known negative effects on some individuals and families is an inevitability. Like smokers, drug addicts and drinkers, gambling is a vice that people won’t quit. They’ll just engage in illicit forms that are far more dangerous, and more likely to be rigged against them.
What is required is a trustworthy gambling industry that allows those who want to gamble to take an informed risk with their money. The money they lose — and most will — must be redistributed to deserving recipients. Even the money earned by profitmaking operators would at least be invested in businesses that create jobs and grow the economy.
It is arbitrary and nonsensical to restrict the establishment of private lotteries while the government lottery is a hotbed of corruption. Deregulate private lotteries and allow society to reap the positive benefits of inevitable gambling, and we will see our economy grow, unemployment diminish and the country become the better for it.
• Woode-Smith, a political analyst, economic historian and author, is an associate of the Free Market Foundation. He writes in his personal capacity.
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