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Country analysis > South Africa Last update: 2019-06-25  
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The National Lottery and the non-profit sector

2.1.4 The loss of funding from alternative (scratch card) gaming operations
 
The nationalisation of the lottery meant that a variety of earlier gaming operations, for example, those run by the Community Chest, Viva and Ithuba Trusts, were forced either to close down or to compete under very different circumstances. Many beneficiaries of these operations were affected badly, and have been forced to scale back their operations until alternative sources of funding can be located. According to Joe Foster, chairperson of the Lotteries Board, these regulations are intended to protect the public from dishonest fundraisers and scratch card operations, rather than unduly to restrict the capacity of organisations to raise their own funds.55 One of the functions of the Lotteries Board is to monitor and ensure that organisations register with the Board, and comply with its regulations.

Some non-profit organisations have dismissed this as nothing more than an attempt to protect the monopoly enjoyed by the National Lottery. Others have suggested that the requirements governing the operation of these lotteries are too onerous, especially regarding prize money, making it very difficult for non-profit organisations to raise funds via their own lotteries.

Recent amendments to the provisions governing society lotteries make it possible for organisations to continue to raise up to R12 million annually. Several non-profit organisations, notably the Nelson Mandela Children’s Fund, the South African Blind Workers’ Organisation, the Cotlands Baby Sanctuary, the National Thoroughbred Trust, and the Variety Trust, have registered with the National Lotteries Board to legally conduct society lotteries.56 Although this is an encouraging start, the viability of society lotteries has yet to be demonstrated, and it remains to be seen whether the domestic gaming market is large enough to allow any small lottery to compete with the National Lottery.

For their part, the Lotteries Board and the Department of Trade and Industry are adamant that there is sufficient space for society lotteries to compete, and to raise additional funds for the non-profit sector. Moreover, they claim that the former beneficiaries of scratch card operations have exaggerated greatly the extent of their dependence on these funding sources, and that they are already receiving Lottery grants vastly in excess of any funding they received from the old scratch card operations. There is some substance to this point: In one case known to the author of this report, an organisation that is particularly critical of the National Lottery has just received a grant exactly ten times that which it used to receive from the Community Chest.57

In summary: it is important to note that there is a very strong sense within the welfare and development sector that the former scratch card and gaming operators who lost out as a result of the National Lottery should be compensated for the reduction in their revenues.

Footnotes:
  1. Cited in Christiane Duval (2001).
  2. Sershan Naidoo, cited in Anon (2000).
  3. The Heldergerg Society for the Aged, which was awarded R600,000 in the 2002-2003 funding cycle.
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