Tom Eaton Discusses Concerns Over State's Approach to Lotto Tax Revenue
The South African government is moving towards taking over the administration of the national lottery, a transition that has already spawned the cynical prospective slogan: "Tata ma chance, ta-ta ma billions." Sizekhaya Holdings is anticipated to be the last private entity to manage the lottery before it falls under state control, marking a significant shift from the current operator, Ithuba. This move is presented as a way for the state to directly oversee the revenue generated from gambling.
According to Sizekhaya board chairperson Moses Tembe, the envisioned state-run lottery would draw inspiration from models like China's, where the Chinese Communist Party maintains control over the means of production, or in this case, the mechanisms for generating gambling revenue and potentially fostering addiction. The comparison to China is not just structural but also serves as a cautionary tale later in the discussion.
The article underscores a troubling aspect of the lottery's current operation: it largely draws participation from economically vulnerable populations. Many players are described as desperately poor individuals, with research by Unisa indicating that a considerable number use their social grants to purchase lottery tickets. This implies that a state-run lottery could, in effect, be reclaiming a portion of its welfare expenditure, a grim irony in the fight against poverty. The operators are characterized as "cynical millionaires" preying on this desperation.
The author expresses profound skepticism about the proposed state-run lottery, viewing it not merely as a red flag but as "an entire factory that makes red flags but which, having failed to see a number of other red flags, is now on fire." This strong metaphor highlights deep-seated concerns about efficiency, transparency, and the potential for misuse of funds under government management, especially given that the lottery is a "gigantic money-printing machine" that offers revenue without immediate political costs like raising taxes.
To substantiate these fears, the article points to the example of China. Despite having severe penalties for corruption, including capital punishment, Chinese officials were found in 2015 to have embezzled R46 billion from lottery funds between 2012 and 2014. By 2018, rumors circulated about an additional R330 billion being stolen, and the government's response to inquiries about the actual figure was that revealing it would be "inconvenient."
This international precedent casts a long shadow over South Africa's plans. If a system with such stringent deterrents as China's still suffers from massive corruption, the article questions what might happen in South Africa. With the lottery pulling in nearly R10 billion annually, the author raises the alarming prospect of a "feeding frenzy" among what is described as a "consequence-free cadres class" once they gain control of this lucrative revenue stream.