The ongoing defamation lawsuit against intelligence firm Black Cube by Evolution is closely monitored by the gaming industry. The case began in 2020 when Playtech allegedly commissioned Black Cube to investigate Evolution’s activities in banned markets.
This investigation, which involved covertly recorded interviews and conversations with Evolution employees and whistleblowers, resulted in a damaging report claiming that Evolution knowingly provided services in jurisdictions under sanctions.
In April, court filings indicated that Evolution sought to include Playtech in the lawsuit. While Playtech has defended its actions and the investigation by Black Cube, Evolution has condemned it as a "smear campaign," rejecting the allegations as “highly inflammatory and knowingly false.”
Amid the ongoing court proceedings, a pivotal piece of evidence for Evolution's defense has emerged: a report from Spectrum Gaming Capital. This analysis aimed to refute the allegations from Black Cube. However, it was kept confidential until recently due to the commercial sensitivity of its content.
This week, the court released the 2022 report in full. Playtech celebrated several findings that it claims support the Black Cube report. Importantly, the Spectrum report acknowledges that Evolution did not intentionally allow its games to be available in banned territories, albeit it flagged several compliance issues that resulted in its games being accessible in regions where online gambling is restricted.
According to the Spectrum report, Evolution games were found available in the UAE, Singapore, Hong Kong, and Saudi Arabia. The initial pages of the August 2021 report detail an extensive review of Evolution's operational and compliance practices, aimed at addressing the claims from the anonymous report.
Spectrum’s tests utilized a virtual private network (VPN) to access these restricted markets, confirming that, unlike certain countries, Evolution’s games were indeed accessible in the UAE, Singapore, Hong Kong, and Saudi Arabia. However, the investigation revealed that access to Evolution games in Iran, Sudan, and Syria, contradicted Black Cube’s claims, with Spectrum stating, "When we attempted to play games in those locales using VPNs, we were repeatedly denied access." Thus, allegations concerning these nations were deemed “unsupportable and lacking credibility.”
Spectrum pointed out that two sites, BitCasino.com and Stake.com, were knowingly offering Evolution games in these banned markets, violating their contracts. These sites were associated with Evolution clients, B2B aggregators Hub 88 and Babylon. The report concluded that Evolution's "ineffective compliance procedures" allowed these violations to occur unnoticed.
It noted, "Evolution’s ineffective compliance procedures need prompt reevaluation and enhancement to comply fully with contractual terms,” warning of reputational risk and potential regulatory scrutiny arising from these unauthorized activities.
The report also evaluated Evolution's client vetting processes, stating that while Evolution required clients to certify ownership of 25% or more, its methods could be flawed. Spectrum advised that any red flags during onboarding should prompt Evolution to reconsider partnerships or conduct further due diligence before proceeding.
Concerning the allegations made by Black Cube about interviews with former Evolution employees, particularly Ezugi CEO Kfir Kugler, Spectrum suggested that these interviews might not have led to the incriminating information Black Cube suggested. Kugler claimed he never intended to provide damaging information and felt misled by Black Cube, suspecting the interviewer used a false identity. He stated, "I know we have players in Dubai," in direct response to Black Cube's assertions.
Additionally, Black Cube alleged that Evolution allowed wagers in cryptocurrency; Spectrum confirmed that end users placed bets using crypto, but clarified that it was the operators, not Evolution, that accepted these bets. Spectrum’s analysis indicated that about 1,124 instances of cryptocurrency use represented 11.5% of sessions on Evolution games associated with Hub88.
The report highlighted Evolution's reliance on its clients to implement anti-money laundering (AML) and know your customer (KYC) procedures without adequately reviewing compliance, noting significant gaps in oversight for cryptocurrency transactions.
The complete Spectrum Gaming Capital report is now publicly accessible.
