The ongoing lawsuit between Evolution Gaming and the intelligence firm Black Cube in the New Jersey Superior Court is garnering significant attention within the gaming industry. The dispute traces back to 2020 when Playtech allegedly hired Black Cube to investigate Evolution’s involvement in prohibited markets and activities without proper licenses.
This investigation reportedly included covertly recorded interviews and discussions with Evolution employees and various whistleblowers. Ultimately, Black Cube produced a report accusing Evolution of knowingly operating in restricted jurisdictions.
In April, legal filings revealed that Evolution sought to include Playtech in the case. While Playtech has defended its collaboration with Black Cube, Evolution condemned the actions as part of a "smear campaign," vehemently denying the claims as "highly inflammatory and knowingly false."
As the legal proceedings unfold, a crucial piece of evidence intended to bolster Evolution’s defense was a report by Spectrum Gaming Capital, a specialized gaming advisory firm. This report evaluated Evolution's business practices and aimed to counter the allegations presented by Black Cube.
Until recently, however, the report remained confidential due to concerns over commercially sensitive information. This week, the court unsealed the 2022 report, prompting Playtech to celebrate certain findings that it asserts confirm aspects of Black Cube's report.
Although the Spectrum report acknowledges that Evolution did not intentionally operate in banned markets, it raised several compliance concerns, indicating that Evolution’s games were, in fact, available in jurisdictions where online gambling is illegal.
Key findings highlighted that Evolution’s games were accessible to players in the UAE, Singapore, Hong Kong, and Saudi Arabia. The initial pages of the report detailed a thorough review of Evolution’s operations, including public records and the review of its anti-money laundering procedures in relation to the allegations in Black Cube's report.
Spectrum’s testing employed a VPN to access restricted markets, revealing that while the firm's games were available in some prohibited areas, access was denied in Iran, Sudan, and Syria. Spectrum determined that claims about these jurisdictions were "unsupportable and lacking credibility and proper foundation."
Spectrum also found that sites like BitCasino.com and Stake.com were knowingly offering Evolution’s games in these disallowed markets, breaching their contracts with the supplier.
The advisory firm attributed these violations to Evolution's "ineffective compliance procedures," noting that these issues appeared to go unnoticed by the company. They stated, "In our judgment, Evolution's ineffective compliance procedures have allowed these situations to develop and therefore need prompt reevaluation and enhancement in order to comply fully with the terms of the contracts."
The report mentions that Evolution could unintentionally be subject to having its games played through third-party operators in violation of its contracts, which could result in unauthorized revenue generation for the company.
Spectrum outlined potential weaknesses in Evolution’s vetting processes for clients, explaining that while the company requires certification of beneficial ownership for significant stakeholders, the method lacks rigor, allowing for the possibility of inaccuracies in documentation.
The report advises that if any red flags arise during the onboarding of potential partners, Evolution should cease business dealings or conduct thorough investigations prior to engagement.
In response to the claims made by Black Cube, which included reported interviews with Evolution employees, Spectrum conducted follow-ups that revealed some individuals had little knowledge of the matters discussed. One interviewee, Kfir Kugler, CEO of games developer Ezugi, claimed he felt misled by Black Cube and reiterated that it was never his intention to implicate Evolution. He further clarified that Evolution does not operate in Iran, although he acknowledged that they have players based in Dubai.
Another aspect of the Black Cube report alleged that Evolution accepted wagers in cryptocurrencies. However, Spectrum confirmed that while users placed bets with crypto, the actual acceptance of these wagers was managed by the operators, not directly by Evolution.
After analyzing part of a 75-page transaction spreadsheet from Evolution, Spectrum identified over 1,124 instances of virtual currency bets, indicating they accounted for approximately 11.5% of total sessions recorded.
Spectrum criticized Evolution for relying on its operators to manage compliance with anti-money laundering and customer verification protocols without monitoring their adherence to these requirements.
The complete Spectrum Gaming Capital report is now available for public access.
