INTEGRATED REPORT  2019
The NLC approach to materiality

The six capitals

We undergo a meticulous process in determining our material matters. This process, which is premised around the practice of integrated thinking, takes into account every area of the Commission, including our stakeholders, unique operating environment and value-based strategy. We encapsulate this in our materiality framework which forms the basis to our approach, safeguarded by effective and ethical governance in ensuring we generate value for our stakeholders and beneficiaries.

Material matters

Conflicting
beneficiaries
Macroeconomic
conditions
Interpretationof
legislation
Online gaming Challenges in regulation

A majority of complaints and allegations received by the NLC relate to conflicting beneficiaries once funded. The conflicts emanating from beneficiaries as well as beneficiaries and service providers has led to the NLC’s reputation and integrity being compromised.

Notwithstanding NLC’s best endeavours to mediate between beneficiaries, matters often led to criminal investigations and litigation amongst conflicting beneficiaries and/or service providers.

The NLC continues to provide capacity building to beneficiaries in order to ensure beneficiaries understand and adopt sound governance practices.

With the persistent challenges facing the South African economy, poverty, low levels of employment, as well as an urgent need for economic growth, we continued to face challenges in meeting the unrealistic demand on the NLDTF. We continue to look for innovative measures to maximise revenue while encouraging and channel our valued beneficiaries to explore other forms of funding through the introduction of society lotteries and innovative projects to ensure sustainability of their organisations. Our stakeholders remain challenged in understanding section 2A of the Act relating to proactively funded projects. The report, under the grant funding section, provides a detailed overview and corporate governance framework of our Pro-Active Funding Model. The Lotteries Act requires an amendment to ensure that NLC has full regulatory powers. These include the issuing of penalties for certain regulatory breaches and inspectorate powers to police and enforce the law on illegal operations. Administrative penalties are tools used by regulators to enforce compliance with legislation. These penalties should be of monetary value and should be imposed without reliance on a court process for enforcement thereof. Powers to appoint inspectors with all required enforcement powers to conduct inspections on illegal lotteries would assist in effective execution of the mandate of policing lotteries. Challenges identified by the Board in regulating the lotteries industry include conflicting legislation and different regulators for gambling and lotteries which create ambiguity in regulation as well as lack of enforcement powers to effectively regulate lotteries. Traditional lottery operators are finding themselves competing with foreign lotteries due to technological online platforms. Online gaming is providing more options for consumers; however, it is also threatening the revenue generated by traditional lottery operators. The proliferation of online operators poses threats to the restrictive legislated environment. The global lottery industry is coming to grips with rapid changes in the industry as a consequence of online gaming and the use of technology. The NLC is expected to regulate the lotteries industry and curb the scourge of illegal lotteries. The NLC is further expected to advise the Minister on the issuing of the licence to conduct the National Lottery and Sports Pools, whilst ensuring the National Lottery and Sports Pools are conducted with all due propriety, that the interests of every participant in the National Lottery are adequately protected and that net proceeds of the National Lottery are as large as possible. Research undertaken by the NLC in 2016 on the impact of illegal lotteries estimated revenue generated from online illegal lotteries to be R18 million per annum. The impact of this unlawful activity has both an economic and social dimension, such as loss of intermediate production and value-addition in the national economy and loss of employment opportunities.