Evolution (EVOG.ST) and U.S. gaming rival DraftKings (DKNG.O) have both been dealt the same bad hand.
The group run by Martin Carlesund lost as much as 8% of its value on Wednesday after Bloomberg reported that a rival complained to a U.S. regulator that the Swedish gaming company operates in some countries illegally. DraftKings faced a similar accusation earlier this year from a short seller. Evolution has denied the claim, saying its games can’t be played in any countries where gambling isn’t legal, or which are on the U.S. sanctions list.
The DraftKings scandal seems to have done little lasting damage, suggesting Evolution needn’t panic. Still, it’s a reminder that its technology, which connects virtual gamblers to real-life roulette tables, is used by punters in many different countries, potentially making them hard to track and leading to unpredictable risks. Business is good: sales nearly doubled year-on-year in the three months to September, and Evolution’s shares have risen nearly 80% this year, trading at a high-flying 27.6 times 2021 sales, per Refinitiv data. After a good run, it’s small wonder investors are taking some chips off the table.