Evolution Denies Breaching US Sanctions List

November 25, 2021
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Gaming software and streaming giant Evolution has hit back at claims in a secret report that it was enabling “a myriad of illegal activities, as well as regulatory and contractual violations”, including allowing gaming in sanction-listed countries such as Syria and Iran.

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Gaming software and streaming giant Evolution has hit back at claims in a secret report that it was enabling “a myriad of illegal activities, as well as regulatory and contractual violations”, including allowing gaming in sanction-listed countries such as Syria and Iran.

The firm denied all the allegations and branded the anonymous claims as an attempt to discredit its business.

Martin Carlesund, the firm’s CEO, said it had contacted the New Jersey Division of Gaming Enforcement and had initiated an internal review, after a complaint was made to the regulator.

Last week, law firm Calcagni & Kanefsky had filed a complaint by an “anonymous competitor” to the state regulator, alleging that Evolution had breached US laws by conducting business in countries such as Iran.

It said private investigators, retained by the US-based competitor, had also recorded themselves playing games through internet addresses in Singapore and Hong Kong, where online betting is banned.

On Wednesday (November 24), the firm denied the claims, with Carlesund adding: “Those allegations originate from an anonymous third party with what appears to be an intention to discredit Evolution.

"An internal review has been initiated to ensure a swift response to any questions from the New Jersey Division of Gaming Enforcement (NJDGE)."

Carlesund said that it “used all tools at its disposal to block play in certain countries, including those on sanctions lists”. The company said it had been “falsely alleged” that its games were accessible directly from countries under US sanctions, something that would not be possible “without sophisticated technical manipulation”.

The company’s statement added: “According to allegations made in the anonymous and dubious report, active manipulation of Evolution’s systems has been deployed to create the impression that play from such countries was possible. This use of Evolution’s content, through an operator that was not an Evolution customer, but connected to an aggregator which Evolution has as a customer, was seemingly conducted by first establishing a VPN-tunnel from an IP-address in a blocked country to obtain an IP address in an accepted country.

“From this IP-address a connection through the operator to Evolution’s lobby was made, clearing all geographical IP checks, and a session was established with the browser. Thereafter, the VPN from the accepted IP address was terminated, while the content session remained active in the browser.

“The first IP address from the blocked country remains active. Prior to those steps, multiple attempts to connect directly from the IP address in the blocked country were rejected.

“This is 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.”

Carlesund said that it sold its certified content to licensed operators and aggregators, after which it had no control over how games would be used by partners. However, he insisted the firm did due diligence on partners and insisted they were licensed operators.

He said it was the operator’s responsibility to conduct a know your customer (KYC) on each player, decide what markets to focus on, what players to accept and to comply with its regulation and its licence.

“The supplier of a cabinet on a gaming floor is not responsible for who enters the casino and plays on that cabinet,” he said. “Consequently, the supplier of the cabinet is not responsible for the KYC of the player and does not handle the player’s money. The same principle applies in the online casino market. The control of who plays the game is a strict responsibility of the operator.”

The company also cited ongoing work with regulators and operators to support and provide tools to address and manage markets according to licence and regulatory frameworks.

Carlesund also denied another allegation in the 122-page report that it “controlled or owned” some operators or that it had received “direct cash payments from these operators, who accept cash and bitcoin payments from end-users playing Evolution games — a heavy violation of Evolution’s official anti-money laundering policy, as well as money laundering laws and acts”.

Evolution’s share price has continued to slide after losing $3bn in market value when the accusation was reported.

The company has grown rapidly as more people turned to online gambling during the pandemic, with the United States becoming a focus, as more of its regions legalise sports betting.

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