Evolution Shares Dive After ‘Black Market’ Admission
Evolution AB [ST: EVOG] saw its shares fall by over 10% on Monday, the final trading day before Christmas, following reports that the UK Gambling Commission (UKGC) was reviewing the Swedish online gaming software provider’s license. The company's stock rose modestly on Friday.
The inquiry pertains to allegations that Evolution’s games could be accessed by UK players via unauthorized operators, which the company confirmed in a message to investors on December 20. Evolution acknowledged that its games had been seen on unauthorized sites but stated that the issue has now been resolved.
“…[G]ames on the identified websites not holding a Commission license have been made unavailable from the UK,” read the note.
‘Strong Measures’
Martin Carlesund, the CEO of Evolution, stated that his company was “now implementing decisive measures, utilizing all technical resources at hand” to guarantee that its games could only be accessed by Brits via UK-licensed operators.
Carlesund mentioned that Evolution stayed devoted to "a transparent and open relationship" with regulators.
Investors were unsettled by the potential outcome of the review, which might lead to a substantial penalty, or even the suspension or revocation of their license.
Although the UK contributes roughly 3% of Evolution's income, analysts from Jeffries indicated that investors feared the review might lead to regulatory measures in other regions.
Analysts at Pareto indicated that these concerns were exaggerated, and Evolution is not at risk of losing its UK license.
Enigmatic Document
Evolution is presently involved in a defamation lawsuit where it is taking legal action against an unidentified party that produced a 2021 report claiming the company was operating in multiple black markets. These comprised nations under US sanctions, including Iraq, Sudan, and Syria.
The complaint was submitted to the New Jersey Division of Gaming Enforcement (DGE) by the law firm Calcagni & Kanefsky, located in Newark, NJ.
An ensuing DGE inquiry discovered no regulatory violations by Evolution, and the firm was exonerated of misconduct in February 2024. The software company has requested the New Jersey Superior Court to disclose the identity of its claimant, but has not yet been successful.
In April, a judge concluded that further investigation was required to review the claims in the report before Evolution could identify precisely who it’s taking legal action against. The judge decided that it was necessary to balance an attorney's duty to protect a client's identity with a plaintiff's entitlement to obtain information required for civil action.
According to the lawsuit filed by the company, the DGE investigation led to a reduction of US$3 billion in Evolution's market capitalization.
