Swedish gaming giant Evolution says it is taking a “prudent” approach to its sweepstakes operations as its CEO vowed not to offer products in that vertical if state regulators push back.
Speaking on an earnings call on Thursday, Chief Executive Martin Carlesund noted that while his company sees potential in continuing to work with sweeps sites, he only wants to do so in states in which there is no legal gray area.
“Sweepstakes is a popular product in the U.S., and we offer it in states where it’s not prohibited or in any way under regulatory scrutiny,” Carlesund told investors and analysts. “Sweepstakes is a very small part of our total revenue but we believe it has some potential. As the market leader, we’re going to offer a great variety of content.”
California leavin’
In August, a lawsuit filed by the office of Los Angeles City Attorney Hydee Feldstein Soto against sweeps site Stake.US named Evolution and several of its subsidiary studios as co-defendants. The suit alleged that Stake.US was a de facto illegal gambling site in violation of numerous state laws. Evolution pulled its games from Stake.US in the wake of the filing.
The following month, California’s legislature passed AB831, the ban on online sweepstakes gaming. Gov. Gavin Newsom then signed the bill into law earlier in October and it takes effect on Jan. 1.
Carlesund confirmed that Evolution withdrew from the Golden State in the wake of those developments.
“In the quarter, a city attorney in Los Angeles made a personal interpretation of California law, and as our strategy is that we don’t offer sweepstakes where there are regulatory uncertainties, we pulled it from the market,” he said. “Simple as that.
“If that’s what you want, then we’ll withdraw from that. We provide to the sweepstakes market where there are no regulatory problems or any legal problems and they’re very lenient. We talk to the regulators and if there would be a letter from a regulator or an authority stating ‘don’t do it here,’ we would immediately go away. We want to supply to them as long as there is no regulatory or authority saying no.”
Carlesund wants justice in ‘horrible’ Playtech situation
Inevitably, though Evolution’s leaders were primarily there to discuss the companies’ financials, questions about Playtech featured prominently on Thursday’s call.
Earlier this week, news broke that it was Playtech that commissioned intelligence firm Black Cube to investigate and create a report that alleged Evolution was operating in markets where gambling is illegal. Evolution said it plans to add Playtech to its defamation lawsuit that already includes Black Cube.
“I look for fairness, justice,” Carlesund said when asked by analysts about the situation. “I think it’s horrible to do what has happened to us. Someone is hiding between layers of companies and hiding their true identity and writing a number of false statements in the report to us. It’s unfair.
“When someone behaves in that way, hides for four years doing this type of action, it takes a bit away from my belief in humanity and in fair play and in ethics and morals.”
Carlesund did not shed much light on what he expects the extent of the damages to be to his company as a result of the furor, only confirming that it will be “a severe amount.”
“It’s naturally very expensive to do these types of [litigation] exercises,” he acknowledged. “We do it to protect the value for the shareholders. We do it to protect the company.
“It’s unheard of. It’s a behavior that we just don’t understand. The first thing we look for is some kind of justice.”
