The ongoing defamation lawsuit between Evolution and intelligence firm Black Cube is garnering significant attention across the gaming sector. This lawsuit traces back to 2020, when Playtech allegedly hired Black Cube to investigate Evolution’s operations in prohibited and unlicensed markets.
The investigation involved clandestine recordings of interviews and conversations with Evolution employees and whistleblowers, culminating in a critical report claiming the company knowingly provided services in jurisdictions under sanctions.
In April, legal documents revealed that Evolution sought to include Playtech in the case. Playtech has defended its actions, stating that its investigation through Black Cube was warranted, while Evolution has condemned the allegations as a "smear campaign," labeling them as "highly inflammatory and knowingly false."
As the court proceedings unfold, a crucial element supporting Evolution's defense is a report by Spectrum Gaming Capital. This report examined Evolution's operations and aimed to counteract the findings from the Black Cube report. Until recently, this document was confidential, as Evolution cited the presence of commercially sensitive information.
However, this week, the 2022 Spectrum report was released publicly by the court. Playtech has noted several findings from the report that it claims affirm its own findings derived from Black Cube.
Importantly, the Spectrum report concedes that Evolution did not knowingly offer games in banned territories. Nonetheless, it identified several compliance issues that have allowed its games to be accessible in regions where online gambling is prohibited.
Key findings from the report indicate that Evolution’s games were available in the United Arab Emirates, Singapore, Hong Kong, and Saudi Arabia. Spectrum conducted an extensive review, including a technical operational compliance analysis related to the allegations made in the anonymized report.
Tests utilizing a VPN to access restricted markets revealed that Evolution's games were indeed accessible in these areas, although efforts to play from Iran, Sudan, and Syria using VPNs were unsuccessful. Spectrum stated, "When we attempted to play games in those locales using VPNs, we were repeatedly denied access" and described the allegations concerning these countries as "unsupportable and lacking credibility and proper foundation."
Spectrum's report criticized Evolution's compliance procedures, highlighting that websites like BitCasino.com and Stake.com were found to offer Evolution's games in markets where they were explicitly prohibited under their contracts. The report pointed to these clients, linked to Evolution client aggregators Hub 88 and Babylon, as having allowed access to games in violation of their agreements.
Spectrum remarked that Evolution's "ineffective compliance procedures" contributed to the detection failures surrounding these illicit activities. They stated, "Evolution's ineffective compliance procedures have allowed these situations to develop and therefore need prompt reevaluation and enhancement to comply fully with the terms of the contracts."
The report further indicated that income was generated from these unauthorized operations and suggested that such instances, while not intentional, could harm Evolution’s reputation and expose it to increased regulatory scrutiny and potential sanctions.
Spectrum also assessed Evolution's vetting processes for potential clients, indicating that while clients were required to disclose beneficial ownership of 25% or more, the methods for verifying this information were lacking. They critiqued Evolution for not conducting thorough investigations when red flags emerged during onboarding.
In addressing findings from the Black Cube investigation, the report examined interviews with Evolution employees, pointing out that several individuals assert they lacked sufficient familiarity with the allegations presented against the company. Notably, Ezugi CEO Kfir Kugler stated that it was never his intention to incriminate Evolution and that he felt misled by Black Cube due to the apparent use of false identities by their operatives.
Another aspect of Black Cube’s claims involved the acceptance of cryptocurrency for wagers. Spectrum determined that while users placed bets with cryptocurrencies on Evolution games, it was the operators who accepted these bets, not Evolution itself. Analysis of a transaction spreadsheet revealed up to 11.5% of sessions involved crypto wagering.
The Spectrum report concludes that Evolution relies on its clients to manage anti-money laundering and Know Your Customer (AML and KYC) compliance, without actively reviewing their compliance with these obligations.
