Organisers' obligations

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A society that has been registered to run lotteries has a range of responsibilities that fall into several categories:

• Submitting lottery fees and guarantees to the National Lotteries Board (NLB).
• Submitting lottery returns to the NLB.
• Submitting financial statements on all lotteries.
• Keeping and retaining records and accounts.
• Permitting inspection by the NLB.
• Ensuring certification of external lottery managers (where applicable).

Fees and guarantees

In addition to the once-off fees payable when application is made to register the society with the NLB and to register a scheme for running lotteries, there are other fees payable to the NLB for each lottery that is run.

• Lottery fees must be submitted to the NLB in advance of the commencement of the lottery.
• They vary according to the value of the prizes on offer, as indicated in the table below.

The NLB requires assurance that a society offering lottery prizes of R10 000 or more is capable of paying these prizes. The society is likely to be required to:

• Provide a bank guarantee for the total prize money.
• Lodge a security deposit equal to the total prize value with the NLB.

It should be noted that the board has the right to waive payment of fees and to review the fee structure annually.

Submitting returns on each lottery

After completion of each lottery run in accordance with its approved scheme, the society must submit to the NLB a return, utilising form SL14/00. This form can be downloaded here or obtained from the Information Centre (Tel: 08600 65383).

The return must reach the NLB within three months of the date of the lottery draw or date of sale of the last tickets in an “instant lottery”.

The purpose of the return is to:

• Give details of the proceeds of the lottery, the expenses and the prizes.
• Show how the amount available for distribution was distributed.

The return submitted must:

• Accurately reflect the results of the relevant lottery.
• Be completed in full, giving all pertinent details including the value and source of any third party donations towards lottery expenses.
• Reflect details of any interest earned on the proceeds of the lottery before their distribution. This interest should be added to the original proceeds and form part of the amount distributed.
• Be signed by the lottery promoter/manager and a member of the society’s governing body. This requirement applies regardless of whether an external or internal lottery manager has conducted the lottery.

Societies are also required to submit original beneficiary receipts of lottery proceeds accompanied by Form SL20, which can be downloaded here. This should preferably be submitted at the same time as the lottery return.

Submitting financial statements for the year

The law requires that societies submit financial statements in respect of all lotteries conducted in their name during the course of a year.

• These must be prepared by an independent auditor registered in terms of the Public Accountants and Auditors Act (No 80 of 1991).
• The auditor must prepare a report to accompany the financial statements.
• The documents must be submitted within three months of the end of the year in which the lotteries were conducted.

Keeping and retaining records

As indicated below, the NLB has the right to inspect any society lottery operation at any time. This underscores the need for lottery organisers to ensure, before proceeding with a lottery, that good record-keeping and accounting procedures are put in place.

It is also important that separate records are kept for each lottery and there is no overlapping or merging or records.

The NLB recommends that the following basic records should be maintained.

• Details of the ticket printing order and the tickets received from the printer.
• Details of the tickets issued to each point-of-sale, as well as all tickets sold, returned unsold tickets, and unsold tickets not returned (together with a reason for the failure to return these tickets).
• Details of all income received from the sale of tickets, together with banking records to support the receipt of such income.
• Details of all expenses incurred, including relevant invoices. These should separate expenses according to source of payment:
  • Those paid directly from lottery revenue.
  • Those met by the society or the lottery beneficiary.
  • Those covered by donations from a third party.
• Details of all prizes together with the invoices for purchase of prizes.
• Details of lottery winners or, in the case of “instant lotteries”, winning tickets.
• Details of all unclaimed winning tickets, to guard against fraudulent claims.
• Details of the distribution of the proceeds to the beneficiary, where the beneficiary is not the society conducting the lottery. Ideally, copies of beneficiary receipts should be kept when the originals are sent to the NLB. (See Submitting returns, above)
• Where agents are employed, records of the remuneration of each one together with the number tickets sold or returned.

Societies operating under NLB registration are required to preserve all documents related to the running of their lotteries for at least five years from the date of the lottery. Failure to do so could result in registration being revoked.

The only relaxation of this requirement pertains to large numbers of unsold tickets, which could be bulky and create storage problems. The NLB allows that these may be destroyed 12 months after the completion of the lottery provided that:

• Precise records of the destroyed tickets are kept.
• The destruction of unsold tickets is witnessed by two officers of the society.

Permitting inspection

The NLB has the power to inspect lottery operations at any point and does this through its inspectorate. An inspection involves a detailed examination of all records and possibly the copying of these records.

There is a continuous programme of inspections of lottery operations to establish that lotteries are being properly and lawfully managed.

Where records are properly kept and stored, the inspection process is likely to proceed smoothly.

Ensuring certification of external managers

It is acceptable for a society to employ an external manager to run its lotteries. But societies must be aware that external managers need to be certified by the NLB in order to offer their services legally. The onus is on the society to ensure that the manager it is hiring is in fact certified and that the contractual arrangements include safeguards against the failure of the lottery.  

Societies may also hire service providers to assist in organising lotteries. The scope of their services and degree of responsibility would not amount to managing the lottery and the question of certification would not arise.

Also consult:
Lotteries and the law
Sections 38 - 40 and section 53 of the Lotteries Act
Regulations on the conduct of society lotteries