Evolution Gaming withdrawing from the black market?

The live games developer Evolution has come under massive pressure following an investigation by the UK Gambling Commission. The problem: the studio's games were accessible in England via operators who did not have a local license. The company reacted promptly and tried to calm the situation. Now more far-reaching consequences have indeed been drawn: Evolution has apparently restructured its offerings in various regulatory-sensitive markets in Europe and has suffered a considerable slump in sales as a result. Is Germany also involved?

The year 2025 began anything but positively for the Swedish game developer Evolution Gaming.

• Back in December 2024, the UK Gambling Commission carried out a so-called license review under Section 116 of the Gambling Act. The official announcement states: "The review was initiated after the Gambling Commission found that Evolution games were accessible from Great Britain via operators who do not hold a license from the Commission."
• In addition, an investigative report was published by the Norwegian Josimar magazine - also in December 2024 - in which severe criticism was voiced regarding Evolution's supply to the Asian gaming market. The provider is said to cooperate with a number of partners who not only do not have licenses, but could also be linked to extremely dubious activities.

The matter with the English market was quickly cleared up. The official statement:

"Evolution is taking the findings of the Commission's review to heart. We are committed to supporting the licensed UK market and preventing unlicensed traffic." And: "The games on the identified websites that do not have a license from the authority have been made unavailable in the UK."

Shortly after these events, we already speculated in our article "Evolution under pressure due to black market relationships" that this might not be the end of the story. And indeed, further steps were recently announced when the company published its Q1 2025 earnings report. According to the report, "proactive and self-initiated measures to seal off the regulated markets in Europe" had been implemented, which the international trade press interpreted as a kind of black market withdrawal. Revenue apparently fell considerably.

Decline in sales, but positive outlook for the future

The first few months of the year were not easy for Evolution Gaming - at least at first glance. CEO Martin Carlesund admits in the latest quarterly report that the measures taken to secure the regulated markets have left their mark.

A broader initiative is now being taken in Europe: "In addition to the measures already implemented in the UK to meet regulatory requirements, we took proactive, self-initiated steps in February to secure other regulated markets in Europe," says Carlesund.

The statement continues: "We engaged in constructive dialog with all major European regulators during the quarter and are supporting them where we can."

These measures were not without consequences. Especially in markets with low channelization - i.e. where legal offers are hardly accepted - there would be a significant decline in sales. Speaking of which, we recently reported that the fight against illegal gambling in Germany was actually enshrined in the current coalition agreement.

At the bottom line, Evolution posted a profit of around 254 million euros for the first quarter of 2025 - a decline of 5.4 percent compared to the same quarter last year. Nevertheless, the CEO remains confident: "We expect the second half of the year to be stronger." The EBITDA margin for the year as a whole remains on target at between 66% and 68% (EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization").

Despite the temporary setbacks, Evolution's view of the overall situation is positive. With a turnover of around 520 million euros and an EBITDA margin of 65.6%, the provider remains economically robust. Growth compared to the previous year is at least 3.9% - and even 6.1% in constant currency. The company therefore appears to be well prepared for stabilization in the second half of the year.

What is the situation with Evolution in Germany? And could the initiative set a precedent for other developers?

What exactly is behind the "proactive measures to secure the regulated markets in Europe" remains unclear. Evolution keeps a conspicuously low profile in its latest quarterly report and leaves room for speculation. Have black sheep been removed from the partner network? Have regions where regulation is weak anyway been excluded? Or was there simply an appeal to operators to abide by the rules of their target markets?

Another important question concerns the general impact of the action. What does it mean for the competition? Could other developers follow Evolution's example?

• It is conceivable, because Evolution's move could be seen as a signal to the European regulatory authorities: Look, we're taking this seriously and acting independently. If this gesture meets with approval, other providers could (have to) follow suit - at least if they fear similar reprisals as Evolution after the British review.
• However, as long as there are no official Europe-wide guidelines that hold providers accountable, withdrawal will remain voluntary. And only a few developers are likely to forego revenue of their own accord.

Evolution itself takes a similar view. CEO Martin Carlesund emphasizes that redirecting players to legal markets is not (only) in the hands of the company:

"It is important to remember that channeling depends primarily on factors beyond our control - namely the way the regulatory framework is structured," the quarterly report states.

And this is precisely where Germany could soon become a focal point. This is because the Interstate Gambling Treaty of 2021 is increasingly coming under fire. The rules are strict, the bureaucratic hurdles are high - and the gaming experience is suffering. We have already asked ourselves whether the State Treaty can even survive in its current form. Find out more in our article "Could the State Treaty on Gambling fail?".

Source of the image: https://pixabay.com/photos/exit-emergency-exit-escape-route-618506/

Central text sources: https://mb.cision.com/Main/12069/4143009/3420172.pdf, https://igamingbusiness.com/finance/evolution-q1-regulation-back-market-closure-profitability/