The defamation lawsuit brought by Evolution against intelligence firm Black Cube in the New Jersey Superior Court is capturing significant attention across the gaming industry.
This legal dispute traces back to 2020 when Playtech reportedly hired Black Cube to probe into Evolution's dealings in prohibited and unlicensed markets. The investigation involved clandestine recordings of conversations with Evolution's employees and other whistleblowers, culminating in a critical report accusing the company of knowingly providing services in restricted jurisdictions.
In April, court documents revealed that Evolution aimed to include Playtech in its case. While Playtech has defended its Black Cube investigation, Evolution has labeled it as a "smear campaign," firmly denying the allegations and describing them as "highly inflammatory and knowingly false."
Amidst the ongoing court proceedings, a crucial piece of evidence intended to bolster Evolution's defense emerged: a report from Spectrum Gaming Capital. This report analyzed Evolution's operations and aimed to counter the accusations laid out in Black Cube's findings. Until recently, Evolution had kept the report confidential, citing commercially sensitive information. However, this week, the court disclosed the complete 2022 report. Playtech celebrated several findings from the document that it claims align with Black Cube's conclusions.
Interestingly, the Spectrum report acknowledges that Evolution did not knowingly allow games to be accessed in prohibited regions. Nevertheless, it pointed out various compliance issues that resulted in Evolution's games being available in markets where online gambling is restricted.
Key findings from the report indicate availability of Evolution's games in the UAE, Singapore, Hong Kong, and Saudi Arabia. Within its extensive August 2021 report, Spectrum outlined a thorough review of Evolution's technical, operational, and compliance practices, assessing issues tied to the allegations in the supposed "anonymous report."
Their testing using a VPN revealed that Evolution's games were accessible to players in the restricted territories of the UAE, Singapore, Hong Kong, and Saudi Arabia. Conversely, the study found that access to Evolution's games in Iran, Sudan, and Syria was blocked, contradicting Black Cube's previous claims. "When we attempted to play games in those locales using VPNs, we were repeatedly denied access," the report stated, deeming Black Cube's allegations regarding these countries as "unsupportable and lacking credibility."
Spectrum criticized Evolution's compliance measures, noting that sites like BitCasino.com and Stake.com were knowingly offering its games in banned markets, violating their contracts. These sites were connected to Evolution's clients, B2B aggregators Hub 88 and Babylon. According to Spectrum, "Our investigation revealed certain clients had enabled Evolution’s game content to be provided on their online gaming websites in clear violation of their contracts."
Spectrum attributed these oversights to Evolution's "ineffective compliance procedures," calling for a reevaluation to ensure contractual adherence. It emphasized, "Evolution may be unwittingly susceptible to having its games played through third-party operators, in violation of its contracts."
The findings further confirmed that Evolution had received revenue from these unauthorized activities. Spectrum cautioned that such operations, while unintentional, could harm Evolution's reputation and invite increased regulatory scrutiny.
The report also scrutinized Evolution's client review and vetting methods. At the time, clients were required to certify beneficial ownership of 25% or more of their companies. However, Spectrum argued that the process was flawed, with inaccurate documentation potentially slipping through the cracks. "If red flags become known to Evolution during this onboarding process, it should refrain from engaging with the company or perform enhanced due diligence," Spectrum advised.
Additionally, Black Cube identified various Evolution employees in its report who allegedly provided incriminating information. After conducting follow-up interviews, Spectrum found that many employees had minimal involvement with the disputed matters. For example, Ezugi CEO Kfir Kugler, who was interviewed by Black Cube, stated he was misled during the discussion and never intended to provide damaging information. Kugler emphasized, "I know we have players in Dubai," countering Black Cube's assertions.
Another point of contention was the claim from Black Cube that Evolution accepted wagers in cryptocurrencies. Spectrum acknowledged that while users did place bets using virtual currencies, it was the operators that accepted these bets, not Evolution itself. Through analysis of a lengthy spreadsheet provided by Evolution, Spectrum found evidence of around 1,124 occurrences of cryptocurrency usage, which accounted for approximately 11.5% of the sessions. The report criticized Evolution for relying on clients to implement adequate AML and KYC procedures without verifying their compliance.
The comprehensive Spectrum Gaming Capital report details these findings and is now publicly available for review.
