Managing Editor
Evolution must turn over records of its communications with U.S. regulators and other evidence requested by the defense, ruled the New Jersey judge overseeing its defamation case. The live dealer giant may have won the battle to unmask Playtech as its accuser, but the legal war between the two is far from over. The documents Judge John C. Porto ordered Evolution to produce may well add fuel to the fire as the case enters its most important stage.
In 2022, Evolution sued attorney Ralph J. Marra and the law firm Calcagni & Kanfesky for defamation, as the parties who had circulated a report accusing the company of making its games available in black markets and sanctioned countries, including Iran.
In 2023, the case made its way before the New Jersey Superior Court. There, the last two years have been taken up by Evolution’s efforts to force the defendants to disclose their client — an Israeli private investigation firm called Black Cube — and then to force that company to disclose who had originally commissioned the report. By that point it was already well-understood that a competitor to Evolution was behind it all, but not which company specifically.
In October, Evolution’s efforts finally bore fruit, with Playtech having been named as the competitor in question.
That doesn’t mean that Evolution has prevailed, however. Indeed, it means that the stakes are now high for both companies. Although there are a number of avenues possible for fighting a defamation claim, truth is an absolute defense.
Plan A for Black Cube and Playtech was to avoid having to defend themselves at all. However, now that they have been dragged into the case, the next strategy will be to try to prove that the accusations against Evolution were true.
Regulatory Investigations in the Spotlight
An important component of Evolution’s case is that Black Cube’s report triggered investigations by the New Jersey Division of Gaming Enforcement and the Pennsylvania Gaming Control Board, neither of which deemed Evolution to be guilty of any wrongdoing.
Evolution and Playtech are gaming suppliers, meaning they don’t serve gamblers directly. Evolution dominates the U.S. market for live dealer casino games, while Playtech is the only remaining challenger to its throne since Light & Wonder threw in the towel.
The case is complex because U.S. regulators haven’t yet clearly established the limits of culpability for third-party suppliers. Evolution denies that its products have been available in the markets named in the report, while Black Cube continues to insist it has incontrovertible evidence that they were. Yet, even if Black Cube’s claims are borne out, there would be additional questions about how much Evolution knew and how capable it would have been to prevent operators from deploying its games in illegal markets.
Four of the five pieces of evidence requested by the defendants, and which Evolution must now produce, relate to those regulatory investigations:
- All documents provided by Evolution to the two regulators in relation to the investigations.
- All communications between Evolution or its attorneys and the regulators in relation to the investigations.
- The identities of all Evolution staff members interviewed by the regulators as part of the investigations, and the date of each of those interviews.
- Any notes or transcripts available for those interviews.
Additionally, Evolution must produce a report by Spectrum Gaming Group referenced in its correspondence with the New Jersey regulator.
Accusations of Media Bias
The ugliness of the case isn’t limited to the courtroom. Although many of the developments in the case have been broken by industry news site Next.io, this latest turn comes via Michael Schmitt of Malta Media.
Schmitt claims that Next.io’s and other gambling media sites are not neutral sources in this dispute, and that they’ve ignored yesterday’s court order because it’s unfavorable to Evolution.
For his part, Schmitt argues that Judge Porto’s order amounts to a “judicial turning point” in the case and that the momentum is now in favor of Black Cube and Playtech.
The truth of the matter is that the impact of the evidence in question will depend on its content. It could prove to be exonerating for Evolution, damning to both the company and the regulators who cleared it of wrongdoing, or somewhere in between. Defamation cases often include a generous gray area in which the claims are plausibly true enough to have been made in good faith, yet not provably true enough to result in consequences for the accused.
What’s also true is that we’re getting to the meat of the case, where the risk is highest for all parties involved. The drop in Evolution’s market capitalization in the immediate aftermath of the release of the 2021 report exceeded Playtech’s current value, so the potential damages in the case could be devastating for the smaller company. Yet, having already escaped regulatory punishment once, Evolution has put itself back in jeopardy by pressing the issue in court. If the investigation documents do contain damaging information, it wouldn’t be the first time a defamation case has backfired for the plaintiff.
