In November 2021, an unspecified US-based competitor filed a complaint with the NJ Division of Gaming Enforcement regarding Evolution’s business practices. Evolution Gaming, which is one of the most recognizable brand names in the country is also the largest business-to-business betting company in the world. Evolution enjoys the largest market share when it comes to live dealer games in the US.
According to the official complaint that was made by a law firm retained by an unknown competitor, Evolution has been knowingly allowing its games to be played in countries where gambling is prohibited and in areas that are under sanctions from the US. The complaint listed several countries, including Iran and Syria as a few of these countries.
The complaint was lodged to the NJ Division of Gaming Enforcement by a senior counsel at Calcagni & Kanefsky LLP known as Ralph Marra. The complaint letter was filed on November 12th, 2021. After this complaint was made, shares to Evolution dropped as much as 8%. Evolution, which remains extremely popular, has been a hot stock for a while now, boasting an estimated market value of $33 billion.
Evolution has made a name for itself supplying live betting and video feeds of popular table games like roulette and blackjack to real dealers. At present, Evolution offers these services to several independent online casino operators including some of the most successful names in the US gambling market.
As you can expect, Evolution has denied these accusations vehemently. In particular, the head of investor relations at Evolution confirmed in an email that the proclamations were baseless and inaccurate. According to Linton, Evolution has always paid close attention to the regulations in the jurisdictions it operates in and has applied all relevant laws and regulations.
Evolution enjoys a license to operate in New Jersey, which was among the first to legalize online betting. New Jersey is also one of the most competitive and toughest markets to join with regulators having set some of the most rigorous standards and rules for operators. For instance, regulators require a license holder to demonstrate good character and integrity, which includes not operating and offering services in black markets.
According to reports submitted by private investigators that had been hired by the unnamed competitor, Evolution Games can apparently very easily be accessed from Iran, which is currently subject to sanction by the country. The US issues sanctions against a country that can either be selective or comprehensive, utilizing the blocking of assets and applying trade limitations to accomplish its foreign policy and national security goals.
Evolution is also accused of accepting wagers in Syria and Sudan, both of which are also under sanctions. Private investigators went a step further to suggest that the family members of Syria’s president, Bashar al-Assad as some of the company’s biggest customers. These investigators claim that they discovered the information while they were operating undercover.
The investigators also claimed that they recorded themselves gambling Evolution supplied games via internet addresses in Hong Kong, as well as Singapore, where online gambling is currently outlawed. These investigators claim to have utilized Bitcoin to retrieve and deposit the funds needed to gamble. In addition to these accusations, the investigators also added that Evolution was allowing unlicensed 3rd parties to supply its products in Italy, Sweden, and Spain.
But Evolution denied all wrongdoings stating that it has never supplied games to countries on the country’s sanction list. Evolution further commented saying that it has only ever provided its products to gambling operators that hold valid licenses in markets that online betting is permitted.
Once Evolution supplies its products to the operators, the operators then decide where to offer the products. As such, Evolution has never had a direct connection with a gambler or their money. According to top leadership, the baseless accusations were made to discredit Evolution as the market conveniently prepares itself to welcome new competitors.
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Who are the incoming competing brands?
As mentioned earlier, Evolution enjoys the largest market share in New Jersey. When people think about live dealer games in the country, Evolution and its subsidiary Ezugi enjoy the largest share of the live dealer pie. Indeed, Evolution boasts live dealer contracts with almost every major online casino in the US.
However, this is soon going to be disrupted by the entry of at least 2 new competitors. One of these competitors is PlayTech, which is working hard to debut a live dealer studio in Michigan where it already has extensive experience via its technology partner Play Gun Lake. The other competitor that is set to join the US live dealer market is Scientific Games.
In November last year, Scientific acquired Authentic Gaming partly as a means of gaining live dealer capability in the country. Experts predict that these 2 competitors will likely launch first in the Garden State or Pennsylvania betting markets.
DraftKings also faced similar accusations last year
This is not the first time that a gambling operator in New Jersey has been accused similarly. In June last year, shares of DraftKings tumbled after a popular research company accused the giant sports betting operator of hiding alleged associations to unlawful gaming operations. The long report, which was prepared by Hindenburg Research accused SBtech, which merged with DraftKings last year of extensive dealings in organized crime, money laundering, as well as black market gambling.
As a result of these damaging accusations, DraftKings stock dropped by almost 9%. Fortunately, the stock rebounded after DraftKings issued a statement repudiating the allegations made by Hindenburg Research. According to DraftKings, its business connection with SBTech was finalized in 20202 after carrying out an extensive review of SBTech’s business practices.
During the DraftKings saga, Hindenburg accused SBTech of operating illegal sports wagering operations in several countries that have banned gambling including Iran, Malaysia, Vietnam, and Thailand. In the past, Hindenburg has also accused several well-known organizations of poor practices including electric truck producer Lordstown Motors. Since Hindenburg made accused DraftKings, the case has been under investigation by the country’s Securities and Exchange Commission.
