South Africa Lottery Wins High Court Decision, LottoStar Must Cease Operations

Posted on: September 6, 2021, 03:12h. 

Last updated on: September 6, 2021, 04:14h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The South Africa lottery has finally won a years-long court battle against a prominent online betting group.

South Africa lottery LottoStar
A man in South Africa purchases a National Lottery ticket at a convenience store. A high court in the country has ruled that online betting games based on National Lottery outcomes are illegal. (Image: Sunday Times)

A high court in Mpumalanga has ruled that LottoStar has unlawfully profited off South Africa’s National Lottery.

LottoStar is licensed to operate online fixed-odds betting games in the nation through the Mpumalanga Economic Regulator. It has for years allowed players to place online bets through its internet platform, which is based on the outcome of the National Lottery. The Mpumalanga court ruled that LottoStar’s online lottery offerings are in direct violation of the South Africa Lotteries Act.

Similar to Lottoland in Germany, LottoStar isn’t actually a lottery operator. Instead, it simply sells online tickets, with game results dependent on South Africa’s government-sponsored lottery draws.

The provincial court verdict concluded that no online gaming site can offer interactive betting that comes with a result based solely on the outcome of a government-run lottery.      

LottoStar Taxed Less

The South African National Lotteries Commission (NLC) and its lottery operator Ithuba Holdings have contested LottoStar’s online lottery sales in court since 2015.

The NLC and Ithuba argued that they are competing for the same customer base as LottoStar. But because LottoStar is taxed at only 1.7 percent on its gross ticket sales, it’s often able to offer better odds and promotions to online players than the government-regulated lottery.

We welcome the judgement which reaffirms that only Ithuba as the National Lottery operator can lawfully offer bets on the lottery,” said Ithuba CEO Charmaine Mabuza.

The National Lottery contributes 27 percent of its ticket sales to the South African government’s National Lottery Distribution Trust Fund. The account is used to benefit nonprofit organizations throughout the country.

LottoStar reasoned that its fixed-odds betting license allows it to offer odds on the outcome of the National Lottery. The high court declared otherwise.

“Ithuba has always been driven by the desire to offer maximum contributions towards the betterment of South Africa,” Mabuza continued. “When gaming companies illegally encroach on this terrain, they are, in effect, siphoning off funds that contribute positively to South Africa.

“The judgment … sets 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,” the company concluded.

Appeal Forthcoming

LottoStar, under the high court order, must stop accepting fixed-odds bets from provincial residents on National Lottery games effective immediately. The gaming company must additionally cover legal costs associated with the long legal challenge. LottoStar says it plans to petition the ruling to South Africa’s Supreme Court of Appeal.

South Africa’s lottery is relatively new. The state-sponsored games of chance began in 2000, but were suspended in 2007 after the Pretoria High Court ruled that Uthingo, the country’s initial lottery operator, was not properly vetted during its 2000 licensing.

The lottery resumed in September of 2007 with new operator Gidani. Ithuba obtained the lottery rights in 2015.