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Evolution, a Swedish company that offers B2B online casino software in the US and around the country, is facing scrutiny from the UK Gambling Commission (UKGC) on top of a recent fine from the Pennsylvania Gaming Control Board (PGCB).
The UKGC has launched a probe into claims that the company’s games were being accessed by UK players through operators that had not obtained the necessary licenses.
And just recently, Evolution was slapped with a $25,000 fine by the PGCB for security lapses at its live dealer studio.
Evolution removes content from unlicensed platforms.
Having taken the UKGC investigation seriously, Evolution has already yanked its content from all the unlicensed platforms in question. According to the company, it is cooperating fully with the commission’s probe, which suggests that it is willing to get to the bottom of things and make things right.
Evolution Chief Executive Officer, Martin Carlesund, said in a company’s press release:
Evolution embraces the objectives of the review by the Commission. We are committed to supporting the licensed UK market as well as preventing unlicensed traffic.
“We are now taking forceful action using all technical tools available to us to ensure that our games are only available in the UK through Commission-licensed operators. We believe that a close collaboration to address our joint concerns will lead to swifter and better results. As always, we remain committed to an open and transparent relationship with our regulators.”
Andrew Rhodes, head of the Gambling Commission, had a clear message for gaming industry leaders last November when he urged them to do their homework on the companies they work with. Rhodes cautioned that failing to vet third-party suppliers properly could lead to inadvertently propping up illegal gambling operations.
The Commission’s strategy on combatting illegal gambling is to cause as much upstream disruption as we can, which is why we have focused on ISPs (internet service providers), payment providers, search engines, software suppliers, and more.
Regulatory woes spark investor panic
The UK accounts for just a scanty percentage of Evolution’s revenue. However, the recent spotlight on the company’s activities has sent investors into a panic. The UK Gambling Commission’s review could end in anything from a slap on the wrist to severe penalties. Options include hefty fines, tighter licensing rules, or even the suspension or revocation of Evolution’s license.
News of the review sent Evolution’s stock into freefall, with the value tumbling over 10%. But the numbers that had been presented in Q3 2024 numbers shone bright, with total revenue leaping 27.9%. Net revenue also saw significant growth, climbing 14.7%. The real star of the show, however, was Evolution’s live casino segment, which generated a 15.8% year-on-year increase.
Analysts are worried that the UKGC’s actions could have far-reaching consequences, sparking a domino effect of regulatory scrutiny that could hobble Evolution’s global operations, which span into the US.
Power outage leads to PCGB fine
The Pennsylvania Gaming Control Board issued a recent $25,000 fine to Evolution due to a security lapse that was spurred by a power outage.
The outage caused the studio’s computer servers to fail. That resulted in nearly two days’ worth of footage not being recorded or saved. That is a breach of Pennsylvania’s gaming regulations. It is clear that Evolution is facing a perfect storm of regulatory headaches.
The timing could not be worse for the company. It is already reeling from allegations that it has been facilitating underground gaming in high-stakes markets like Asia.
With this backlash, Galaxy Gaming is officially joining forces with Evolution. Shareholders have given the thumbs-up to the acquisition. The stage is now set for a seismic shift in the world of live dealer gaming.
