Evolution Gaming is known for powering live dealer games for Pennsylvania online casinos. However, the company has run into some hot water recently. Investors have filed a class action lawsuit in the United States District Court for the Eastern District of Pennsylvania, alleging Evolution “made materially false and/or misleading statements,” which affected the supplier’s share price.
Evolution partners with multiple PA online casinos, as live dealer games have been a huge success in the state.
Evolution Gaming accused of misleading investors
Federman and Sherwood, a law firm in Oklahoma City, announced that it filed a class action lawsuit on behalf of Evolution’s investors. It named CEO Martin Carlesund and CFO Jacob Kaplan as defendants.
A press release published by Federman and Sherwood said:
“The Complaint alleges that Defendants throughout the Class Period, which is February 14, 2019 through October 25, 2023, made materially false and/or misleading statements regarding Evolution’s and Evolution’s customers’ compliance with governing laws; the effect of non-compliance on Evolution’s revenue; and Evolution’s predicted growth and growth strategies. From January 24, 2022 to October 26, 2023, a number of disclosures revealed the truth of Evolution’s compliance, revenue, and growth, and brought to light the falsities behind Defendants statements. As a result, Evolution saw a significant change in the value of its share prices.”
In other words, Evolution is accused of dealing with unlicensed customers, along with breaching laws in certain markets. It is also accused of making false claims about its involvement with noncompliant customers.
The shareholders suing Evolution are attempting to recoup the alleged damages against the live dealer supplier.
Not the first time Evolution has been subject to controversy
Evolution has been called out before on suspicious business practices. In November 2021, a competitor filed an investigative report detailing Evolution’s presence in illegal markets. The report claims Evolution:
- Offers games in banned state sponsors of terrorism such as Iran, Sudan and Syria
- Is aware of users’ IP addresses in illegal markets
- Offers games in black markets such as Hong Kong and Singapore
- Violates regulatory requirements in France, Spain, Italy and Sweden
The Compliance+More newsletter said that Evolution reached out to the New Jersey Division of Gaming Enforcement to perform a review of its policies and procedures. However, no follow-up on the matter occurred.
It remains to be seen what happens in this case and what could possibly be uncovered from the report in 2021.
Live dealer games have accounted for more than 50% of online table games revenue within the Keystone State. It’s clear the games are a hit.
Since there is such demand for live dealer options, operators may not think twice about switching to Playtech, which opened a brand new live dealer studio last month in PA.
Only time will tell.