New Jersey regulator drops Evolution misconduct case

The case dates back to November 2021, with allegations that Evolution products were available in countries subject to US trade sanctions. Law firm Calcagni & Kanefsky LLP flagged the alleged wrongdoing to the New Jersey regulator.

Evolution hit out at the claims, saying they were from an anonymous third party aiming to discredit the business. The provider said it works with regulators and operators to support and provide tools that block play from certain countries. These include those on US sanction lists such as Syria, Iran and Sudan. 

Incidentally, the claims wiped billions from Evolution’s market capitalisation.

However, after a thorough investigation into the allegations, the NJDGE has decided not to take action against Evolution. The New Jersey regulator says the matter is complete.

“The NJDGE found no evidence that Evolution sanctioned, promoted, permitted, or otherwise materially benefitted from its content offered by operators in any market that the NJDGE considers a prohibited jurisdiction,” Evolution said in a statement.

“Evolution also conducted an internal review, while concluding that its due diligence and compliance processes were sufficient, Evolution took the opportunity to enhance its processes. 

“The NJDGE supports the enhancements that Evolution has made. The enhancements did not relate to any jurisdictional violations.”

“Sophisticated technical manipulation” required to access products

In its initial response to the allegations, Evolution defended its products. It said the people in prohibited countries could only access content with “sophisticated technical manipulation”.

Evolution says this sort of manipulation created the impression its products were accessible in these markets. 

This is possible through an operator that is a customer of an aggregator offering its products, using a virtual private network (VPN). As such, this creates the impression a player was in a country in which its products were available, rather than one blocked by its systems. 

Evolution blasts “deliberate” efforts to bypass checks

Evolution said a connection was only established after multiple attempts to connect directly from the original IP address were made. It criticised these efforts as “a deliberate course of action to circumvent a broadly accepted and well-established process to check users’ geographical location, with the purpose of discrediting Evolution”.

Evolution added that its partners must hold valid licences for markets in which its products are active. In addition, in many territories, it must have a licence to serve as a supplier.

As it does not handle players or their funds, operator partners are required to conduct know your customer checks on each player. After this, they can make a decision on what players to accept.

Investor case rumbles on

While the news will come as a relief for Evolution, the provider still faces questions over a separate case.

Last month, a class action lawsuit filed alleged Evolution deceived investors in relation to its growth trajectory and compliance.

It represents entities that bought Evolution shares between 14 February 2019 and 25 October 2023. It alleges that within this timeframe, Evolution made untrue or misleading statements. These are in regards to its growth potential, customer compliance, the company’s compliance and the effect of non-compliance on revenue.

Martin Carlesund, Evolution CEO, and Jacob Kaplan, chief financial officer, are defendants in the case.