Evolution under pressure due to black market relationships: could the controversy spread to other game developers?

Evolution Gaming is the largest developer of live casino games in the world. The brand is represented in countless online casinos around the globe. However, recent investigations suggest that these partners include a number of platforms that deliberately operate in markets for which they do not have a license. Evolution is coming under increasing pressure - particularly in the UK at present - to remove its titles from illegally operating operators. Could this set a precedent? Somehow it sounds familiar.

Investigations by the UK Gambling Commission and a report by Norwegian investigative magazine Josimar have sparked a (potentially far-reaching) controversy surrounding Evolution Gaming. It emerged that the developer offers its live games via a whole series of online casinos that do not take licensing in their target markets very seriously. Some of these black market platforms are located in Asia, others in other typical offshore regions of the world. We recently reported that a Berlin-based software company could also have problematic links to illegal online casinos - but the matter is not as clear-cut as it first appears.

In England, voices have already been raised demanding that game developers check their business partners better and only cooperate with companies that have clear licenses in their respective target countries. Should game developers really take responsibility and sort them out immediately? Or does the ball lie with the regulatory authorities, who should finally combat the black market more effectively? Opinions differ, the debate is likely to heat up - and that's where we come in. As always, we provide the context - and not without questioning the facts.

UK Gambling Commission complains, Evolution responds immediately

Evolution finds itself in the middle of a British quandary - or rather: under the hard-hitting magnifying glass of the UK Gambling Commission.

• As the developer itself announced in a press release, the authority carried out an official license review a few weeks ago in accordance with Section 116 of the UK Gambling Act 2005. And anyone familiar with the industry will know that this is not an invitation to tea, but can be a rather tricky business. Especially when the reasons for the check are as critical as in the case of Evolution.
• The official announcement states: "The review was initiated after the Commission found that Evolution games are accessible from the UK via operators that do not have a license from the Commission."

This must have taken some time to sink in at the developer's management level. However, the decision was made to deal with the matter proactively. In its press release, Evolution describes the possible consequences as follows:

"The review may lead to various outcomes, such as specific conditions on the license, financial penalties or even suspension or revocation of the operating license. Evolution is cooperating fully with the Commission and has taken the required immediate action to rectify the situation. The games on the identified websites that do not have a license from the authority have been made unavailable in the UK. Evolution continues to work actively with the Commission to resolve the matter."

That sounds like damage limitation deluxe. Evolution CEO Martin Carlesund also contributed a few words that read like an attempt to calm the waters - albeit emphatically:

"Evolution is taking the findings of the Commission's review to heart. We are committed to supporting the licensed UK market and preventing unlicensed traffic. We are now taking strong action and using all technical means at our disposal to ensure that our games are only available in the UK through Commission-licensed providers. We are convinced that close cooperation will lead to a solution. As always, we are committed to an open and transparent relationship with our regulators."

Evolution could therefore face a whole range of consequences, depending on how things progress.

• From mild to bitter: ranging from "all good, carry on" to hefty fines and even the withdrawal of the license.
• Here's an example: in 2023, William Hill had to pay the equivalent of a whopping 21.83 million euros for violating license requirements. Anyone who voluntarily puts themselves in the firing line can no longer be helped.

One thing is certain: Evolution is now doing everything it can to limit the damage. That means taking games off black market platforms, cooperating with the authorities and giving itself as impeccable an image as possible. Will that be enough? As also stated in the official statement, the UK only accounts for around 3 percent of Evolution's turnover. Nevertheless, the revenue is likely to be substantial - so substantial that it would be better to get on good terms with the regulator. And then there is the reputation that is at stake worldwide. Because the British Gambling Commission has a signal effect - and other regulators are keeping a very close eye on what is happening there.

Evolution's business in Asia is not going down well either

Evolution is not having an easy time at the moment. While the British Gambling Commission is increasing the pressure, a report in the Norwegian Josimar magazine is also making the company a topic of conversation. And this is anything but flattering.

The headline - hard-hitting:

"The Norwegian sovereign wealth fund has invested several hundred million dollars in shares in the Swedish gambling technology developer Evolution. The company offers casino games for Asian markets where betting is illegal and which are associated with operators involved in human trafficking, money laundering and cyber-slavery."

That sits. According to Josimar, Evolution is said to operate through a number of partners in Asia that not only do not have licenses, but are also linked to extremely dubious activities. What's more, some of these companies are also active in Europe and are even said to have sponsorship deals with clubs in the English Premier League.

The financial dimensions of this story are enormous: according to Evolution's own figures, Asia accounted for around 40% of business in the third quarter of 2024. That's almost half of the turnover! At the same time, the company reported that only 39% of its revenue came from regulated markets - and that's actually a slight decrease compared to 2023.

So it's no wonder that the press and authorities are becoming increasingly aware.

Should it really be up to gaming providers to ensure that their partner casinos comply with the regulations of licensed markets?

You might think it would be quite simple: those who develop casino games only pass them on to licensed, clean operators - and that's that. But as is so often the case when it comes to the gambling business, the devil is in the detail. Incidentally, Schleswig-Holstein is the only federal state in Germany with legal online table games from private providers.

Once again, it was the UK Gambling Commission that recently made it clear that it expects all players to take responsibility in order to curb black market activities.

Arguments for more responsibility on the part of providers

At first glance, it seems reasonable to hold game developers accountable. After all, they benefit financially when their products are placed in online casinos - be it on licensed platforms or in dubious gray areas.

1. Moral obligation: Anyone who is reputable should ensure that they are not involved in shady business. A game developer has the opportunity to say: "Not with you!"
2. Brand protection: Scandals like the current one surrounding Evolution damage the entire industry. Game developers have a vested interest in ensuring that their name does not appear in connection with black market activities.
3. Technical possibilities: In times of geo-blocking and AI-supported monitoring, providers could check where their games appear and, in case of doubt, take technical measures to prevent their use on a country-specific basis.

Arguments against transferring responsibility to game developers

On the other hand, the question remains as to whether game providers should really bear the main responsibility. After all, there are already state regulatory authorities - and they actually have precisely this task.

1. Unclear responsibilities: What is considered a "clean" operator? Many platforms have licenses from Curaçao, Costa Rica or the Philippines, which are not recognized everywhere. Where do you draw the line?
2. Disproportionate burden: A provider like Evolution supplies hundreds of partners worldwide. Should it check with each of them whether their activities are 100% legally compliant in all target markets? That sounds like a mammoth task.
3. Regulators have a duty: Ultimately, it should be the state authorities that combat black market providers and set clear rules. It is their job to ensure order in the competition - not that of developers.

Certain parallels with the revelation of the Paradise Papers in 2017

Anyone who has been in the gambling universe for a while might feel a touch of déjà vu with the Evolution case. That's right, we're talking about the Paradise Papers of 2017, which GambleJoe also reported on in detail. Back then, some big names in the industry were pretty much exposed - above all Merkur and Novomatic. Both companies had made money from illegal online casinos in Germany via license fees. There was no regulated German market at the time.

• Merkur got itself into more and more trouble and eventually asked all operators to stop offering their games in Germany without a license. The situation was similar for Austrian competitor Novomatic.
• Many will remember that popular brand classics such as Eye of Horus or Book of Ra were suddenly no longer (readily) available on the web. Some fans even resorted to very dubious addresses and fell for fake machines.
• Merkur and Novomatic only returned to Germany online when the State Treaty on Gambling (GlüStV) came into force in 2021.

Will other international providers alongside Evolution also part ways with black market partners as the current debate (probably) progresses? As was the case in German-speaking countries at the time, this is likely to depend above all on whether and to what extent they have to fear official and/or social reprisals. If the public or legal pressure becomes too great and there is a threat of unpleasant headlines, there may well be similar consequences to 2017 - but on a global level.

Source of the image: Screenshot from https://mb.cision.com/Main/12069/4085961/3187305.pdf

Central text sources: https://mb.cision.com/Main/12069/4085961/3187305.pdf, https://josimarfootball.com/2024/12/02/making-a-fortune-from-illegal-gambling/, https://mb.cision.com/Main/12069/4055614/3071553.pdf