South Africa: Promotional Competitions: Mama – Legitimate Or Illegitimate?

Last Updated: 13 December 2007
Article by Hugh Melamdowitz

Spoor & Fisher has, for numerous years, been advising its clients on the lawfulness or otherwise of promotional competitions. Promotional competitions are governed by Section 54 of the Lotteries Act No. 57 of 1997 ("the Act"). In the first matter of its kind in South Africa, the National Lotteries Board ("NLB") instituted motion proceedings against Firstrand Bank Limited ("FNB"), in terms of which the NLB sought the following order:

  • It be declared that the competition that is being conducted by the respondent (FNB) for the purposes of promoting its short term investment product known as "the FNB Million-A-Month Account" is unlawful in terms of Section 56(b) and/or 57(1)(b) of the Lotteries Act No. 57/1997.
  • That the respondent (FNB) be interdicted and restrained from conducting the competition.
  • That the respondent (FNB) pays the costs of the application.

Spoor & Fisher has been representing the NLB in this application.

In short, the facts of the matter are that FNB has been offering what it terms "a product" known as the FNB Million-A-Month Account ("MAMA"). The product is similar to a 32-day notice account. It has a minimum opening balance requirement of R100.00. The account earns little or no interest and no banking charges or fees are levied by FNB, but it is linked to a monthly competition. In terms of this competition, account holders stand a chance of winning monthly cash prizes, including a grand prize of R1 000 000.00. For every R100.00 in the individual’s account, the account holder obtains one entry in the monthly draw conducted by FNB. Any individual who has deposited R100.00 (or any other amount) is entitled to withdraw that amount subject to FNB being given 32 days notice of the withdrawal. In the event that shorter notice is furnished, penalties could apply.

The NLB argued that MAMA contravenes Section 57(1) of the Act. This was based on the contention that the competition is a lottery that has not been authorised by or under the Act. In addition, it was also argued that because prizes are distributed by lot or chance and success does not depend on skill, MAMA contravenes Section 56(b) of the Act. Furthermore, as the product is being promoted by the respondent (FNB) through the media and connects FNB’s trade and/or business and/or sale of its banking products to members of the public, it is not a promotional competition contemplated by Section 54 of the Act.

FNB responded by arguing that:

  • The product does not constitute a lottery, as one of the essential elements prescribed by the Act for a lottery to exist, namely "subscription", is not present; and
  • The NLB does not have the requisite locus standi (legal standing) to launch this application.

In terms of the Act, any individual conducting a lottery not authorised by the Act or any other law shall be guilty of an offence (see Section 57).

The Act defines a lottery as including:

"…any game, scheme, arrangement, system, plan, promotional competition or device for distributing prizes by lot or chance and any game, scheme, arrangement, system, plan, competition or device, which the Minister may by notice in the Gazette declare to be a lottery;…"

A promotional competition is defined in the Act as:

"…a lottery conducted for the purpose of promoting the sale or use of any goods or services;…"

In terms of Section 63 of the Act, the Act will not apply where there is no subscription.

"Subscription", in turn, is defined as:

"…the payment, or delivery of any money, goods, article, matter or thing, including any ticket, coupon or entry form, for the right to compete in a lottery;…"

The matter was argued before Mr Justice Seriti. Judge Seriti initially considered the issue pertaining to locus standi. Having regard to Section 10(d) of the Act, the Judge held:

"The applicant (the NLB) clearly has the express authority to institute these proceedings. If not, then at the very least, such power is by necessary implication conferred upon the applicant. The applicant performs a civic duty in enforcing the provisions of the Act. It has the principal duty and therefore also the obligation to monitor, regulate, police and enforce the provisions of the Act and also to approach the Court for the necessary relief."

Judge Seriti considered various Court decisions including Johannesburg City Council v Knoetze & Sons 1969(2) SA 148 WLD where, at page 154, Mr Justice Trollip stated:

"Indeed, the presumption is the other way, …: (the) civil remedy of interdict is presumed to be available unless the statute excludes it expressly or by necessary implication."

Judge Seriti also referred to the matter of Roodepoort – Maraisburg Town Council v Eastern Properties (Pty) Ltd 1933 AD 87 at page 96 where Appeal Court Judge Stratford stated:

"Where it appears either from a reading of the enactment itself or from that plus a regard to surrounding circumstances that the legislature has prohibited the doing of an act in the interest of any person or class of persons, the intervention of the Court can be sought by any such person to enforce the prohibition without proof of special damage."

Accordingly, the Court found that the NLB was entitled to approach the Court for the relief it sought.

Judge Seriti held that, if:

"… the conduct of the respondent… (is) found to be in contravention of the act, it cannot be justifiably argued that the applicant is not entitled to approach the Court for the necessary relief. As stated in United Technical Equipment Co. v Johannesburg City Council 1987(4) SA 343 TPD…, failure of the Court to grant an interdict to stop an unlawful conduct would amount to the condonation of behaviour which is contrary to the provisions of the legislature."

Judge Seriti went on to find that, should the NLB have no authority to approach a Court for an interdict, it would be unable to effectively carry out its mandate, particularly that conferred in terms of Section 10(d) of the Act.

Insofar as the question of subscription is concerned, Judge Seriti accepted that, initially, the MAMA account was described by FNB as "an investment account". As a result of consumer complaints to the Advertising Standards Authority, the Advertising Standards Authority ruled, on 24 June 2005, that advertisements touting the MAMA account as an investment account were misleading. Subsequent to that ruling, FNB termed the MAMA account a savings account.

The essence of the argument by FNB was that, as the customer was entitled to recoup the R100.00, there was no payment of a stake and, accordingly, the subscription element required for a lottery did not exist. FNB argued that the MAMA account is just another banking product offered by FNB. It argued that, although initially referred to an "investment account", this description was incorrect and MAMA is, in fact, a savings account.

Judge Seriti found that the right to participate in the draw is inseparable from the opening of an account. Without opening an account, one cannot participate in the competition. In addition, Judge Seriti found that by sacrificing high interest rates for the chance of winning a prize, the FNB customer, by depositing money into the account, is paying a subscription to participate in the draw.

On these premises, Judge Seriti handed down an order finding that:

  • The MAMA account is unlawful in terms of Section 56(b) and 57(1)(b) of the Lotteries Act; and
  • FNB is interdicted and restrained from conducting the competition.

Subsequent to the decision, FNB applied to Judge Seriti for leave to appeal the judgment, but the judge refused the application.

FNB has now petitioned the Supreme Court of Appeal for leave to appeal the judgment handed down by Judge Seriti.

Resulting from the application for leave to appeal, and in accordance with our Court Rules, the judgment of Judge Seriti has been suspended pending the outcome of the appeal, and we await with interest the decision of the Supreme Court of Appeal. If the Supreme Court of Appeal refuses leave to appeal, this would, in our view, result in a final determination by the High Court that the MAMA account is an unlawful lottery. In the event that leave to appeal is granted, the Supreme Court of Appeal will, in due course, consider the matter.

Notwithstanding that the Supreme Court of Appeal has not yet spoken, this case must serve as a warning to all businesses conducting promotional competitions. It is essential that the promotional competition conforms to the provisions of the Act. Should this not be the case, the promoters of the competition, including the company whose products are being promoted and its advertising agency, may well be criminally prosecuted or alternatively, face legal action by the NLB to prevent the competitions from being conducted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.