A giant under the microscope
Evolution’s future has never been more clouded despite its size
Regulatory uncertainty casts a long shadow over the live casino behemoth.
In +More: DraftKings’ talks with startup Railbird have “fallen apart,” say sources.
Puts+takes: analysts react to FanDuel’s prediction market move.
The challengers: South Africa’s Supabets.
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Tied down
You think you’re big time: Evolution’s live casino dominance has reshaped the economics of iCasino, turning what was originally considered a niche product into a critical growth driver for operators.
Yet, as its Q2 earnings show, the Stockholm-listed supplier is now navigating a more complicated landscape, one marked by slowing growth, regulatory turbulence and questions about its once unassailable position.
Slow motion: In Q2 Evolution reported revenues of €524m, up just 3.1% YoY, while EBITDA slipped fractionally to €345m, reflecting a margin of 65.9%.
CEO Martin Carlesund acknowledged the modest numbers on the call with analysts, admitting they were “not financially brilliant.”
Running up that hill: Behind the softer growth are two structural headwinds. In Europe, Evolution’s proactive “ring-fencing” of regulated markets has weighed on short-term revenues, while in Asia the company is still fending off cyberattacks and gray-market pressures.
Meanwhile, RNG revenues barely grew, up just 0.3%, hindered by a record payout that masked underlying performance.
Electricity, gas, water, live casino: A senior industry consultant who spoke to E+M on condition of anonymity likened Evolution to an “infrastructure play,” arguing that live casino is fundamentally different from RNG slots.
“Operators face an unknown volume, infinite variety and dedicated table requirements,” the consultant added.
“That means Evolution provides infrastructure in a way RNG simply doesn’t. One is a commodity, the other isn’t.”
Mr Big Stuff: This scale – Evolution employs 22,000 people worldwide and, according to Jefferies, over 85% of them are dealers – has created extraordinary barriers to entry.
“To leapfrog Evolution, you would need a business five times as big. From a standing start, it’s impossible,” the consultant added.
The implication is that while rivals such as Light & Wonder may try, no one can currently replicate Evolution’s breadth of tables, languages and branding options.
Stop asking questions that don’t matter anyway: An investor who also spoke to E+M on condition of anonymity, and who has tracked Evolution for years, highlighted the shifting market narrative.
“Back in 2020 to 2024, Evolution was perceived to be the definition of ‘quality growth’,” they suggested.
“It fell into the TMT/software bucket and that gave it a premium valuation multiple.”
Gladrags: But sentiment turned when short-sellers spotlighted regulatory risk and growth slowed. “Evolution needed a trigger for the market to realise the emperor had no clothes,” the investor argued.
“The short reports triggered this, the slower top-line growth exacerbated it.”
Evolution’s valuation tells the subsequent story. From a peak EV/EBITDA multiple of 60x, the stock now trades closer to 10x.
Smoke gets in your eyes: Despite the headwinds, Evolution continues to grow its footprint. Yet regulation remains the critical risk. “It only takes one license revocation to cause a real issue with some of its clients,” the consultant warned.
“The UK, for instance – all their major clients have a UK presence. Take that market out, and you create an opening for competition.”
Evolution is in control of its own narrative. “But the issue is that there are wisps of smoke which indicate some kind of fire is going on,” the consultant added
Or as the investor source said, that narrative is not whether Evolution is a good business – it plainly is – but what multiple it deserves in a world where regulation, not growth, dominates the headlines.
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
+More
’bird watch: Talks between DraftKings and yet-to-launch prediction market operator Railbird over a potential buyout have “fallen apart,” according to sources. DraftKings was previously reported to be kicking the tires by Front Office Sports. The appeal of tying up a deal with Railbird lay in its status as a licensed designated contract market. For more on this week’s prediction market developments, see Puts+takes below.
Card declined: Separately, DraftKings has taken the “strategic decision” to bar customers from using credit cards to deposit funds in their accounts. Recall, the company was previously fined $450k by ‘home state’ regulators in Massachusetts for allowing credit card deposits against state statute.
You have a choice: Mixi Australia has set a deadline of August 29 for PointsBet shareholders to accept its increased A$1.30 all-cash offer – but the new price will only apply if acceptances hit over 90%. As it stands, Mixi said it has received acceptances from ~37% of the possible votes. PointsBet’s board continues to recommend the Mixi bid over Betr’s competing all-share proposal. Among the acceptances is rumored to be that of Stake founder Ed Craven, who owns 5% of PointsBet.
No other choice: The largest shareholder in New Zealand-listed casino operator SkyCity, fund manager Allan Gray, said it will be forced to participate in the company's A$240m ($154m) capital raise after the Adelaide casino owner decided to proceed with a plan to raise money at a heavily discounted price.
Read across
Up before the beak, again: ProgressPlay, which provides white-label services to 134 UK-facing iCasino sites, has been fined £1m by the UK Gambling Commission and will be forced to undergo an independent third-party audit to assess the adequacy of its compliance arrangements. In Compliance+More.
What we’re reading
‘The frustrating and complicated ESPN authentication experience.’ Via Lightshed.
+More careers
Kresimir Spajic has been named CEO of Allwyn Digital, a new division uniting iGaming, sportsbook and digital product under one roof. Global race and sportsbook technology provider Internet Sports International has named Jake Francis its director of operations.
Head of Risk & Fraud – Dubai
Head of Finance – Remote
Chief Marketing Officer – Yerevan
Earnings extra
Better Collective
The thong track: Co-CEO Jesper Søgaard said Brazil’s new regulations around welcome bonuses had not helped BC’s business in what had previously been a thriving market. At points in 2022 and 2023 Brazil made up more than half of all new depositing customers across the business. By Q225 it was worth less than 14%.
See yesterday’s Earnings Extra edition (PRO subscribers only).
The PRO service this week also covered the latest analyst notes in a Puts+takes edition and featured an exclusive interview with Rank CEO John O’Reillly.
Puts+takes – FanDuel and CME
Threading the needle: FanDuel parent Flutter has earned the plaudits for its move to partner with CME to produce an offering of events markets based on a number of market and commodity prices including cryptocurrencies.
“FanDuel has found a prudent way to enter the US prediction markets with a reputable partner in CME,” wrote the team at CBRE.
Hi, margin! CBRE went on to examine the similarities between how FanDuel will operate with CME and the equivalent partnership between Kalshi and Robinhood for its broader spread of events-based offerings.
They noted that in Q2 Robinhood reported ~$1bn of volume in its prediction markets hub, using Kalshi’s contracts.
This implied ~$10m of revenue based on Robinhood’s fixed $0.01 fee per $1 contract, on top of Kalshi’s fees.
“While relatively small, we suspect this is high-margin revenue as there are no sports-betting taxes, market access fees or major promotions,” the team added.
’Kings of the wild frontier: Jefferies, meanwhile, suggested FanDuel’s move immediately saw the focus switch to a discussion of DraftKings’ “evolving, complex prediction markets strategy,” and like its rival, it will need to “progress strategically.”
The team noted that one likely route – that rumored deal to buy Railbird (see above) – would “check a box” for entering the prediction space.
While an acquisition would be a more expensive route than Flutter has undergone, it also would allow DraftKings to keep more of the economics of the platform.
’Cause I've been waiting on you: Separately, Sportico reported that Polymarket has all but confirmed it will re-enter the US at some point during the upcoming football season, with a new ad campaign promoting a “waitlist” for people to join by providing a phone number.
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The challengers – Supabets
Shopify: When Photios Anastassopoulos launched Supabets in November 2008, it was with a modest retail betting shop in Johannesburg. But success bred momentum and soon the company was operating multiple shops across various townships
“At one branch we had 170 cashiers – that’s how the market took off,” he says.
Tentative steps: The retail-first approach was deliberate. Online came later, initially hindered by licensing restrictions and a customer base that was not yet tech-savvy. “When we launched online, only 10% of revenue came from digital,” says Anastassopoulos.
“Online wasn’t a major play until the pandemic,” he adds.
Since then, the balance has reversed: “It is now 80/20 online to retail. But retail hasn’t declined at all.”
Spot the ball: Another pillar of Supabets’ success has been fixed-odds lottery, particularly the 49s ball draw, which has overtaken sports betting in retail. “Ball draws now make up 70% of retail, with 30% from sports,” he notes.
Supabets was also an early mover in iCasino, exploiting a loophole in 2020.
Today, the company’s online mix is roughly 90% casino and 10% sports, with Betway and Hollywoodbets leading the competitive set.
Yet growth has not been without setbacks. In 2016, Supabets sold 50% of the business to Phumelela, only to find itself restricted when the racing operator fell into financial difficulties and later administration. Then came a pair of damaging hacks.
“The first time, customers were patient. The second time, we lost 90% of the player base,” Anastassopoulos admits.
Hack for good: The crisis forced Supabets to double down on service. “If you spend 100 rand during the week, the following week we give 10% of losses back,” Anastassopoulos says. “If you call our call center, it responds within minutes. It taught us how to look after our customers better.”
Retention, he insists, is now the company’s strongest asset: “Our customer retention is the best in South Africa.”
Looking ahead, Anastassopoulos stresses sustainability over scale. “We’ve given ourselves 24 months to build a loyal customer base. We’re not in a rush to be number one,” he says.
As for an exit, Supabets is not selling yet, but he acknowledges that within three to five years, the family may look to sell a majority stake.
“Not now – we’re still at the bottom of the growth curve.”
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Connections
Here we go: Sports journalist and influencer Fabrizio Romano has signed a global ambassador partnership with Betway Scores. BoyleSports has been named the official sponsor of TNT Sports’ Premier League coverage for the 2025/26 season. Betano has emerged as the winner among six other operators in a bid to sponsor Brazilian team Flamengo FC, replacing the club’s previous contract with Pixbet. Penn Entertainment and the Chicago Bears have an official casino and sports-betting partnership.
A social first: The NFL has teamed up with Product Madness, Aristocrat’s social gaming unit, to launch NFL Super Bowl Slots – the league’s debut in social casino gaming. AGS have announced that all new Rakin’ Bacon! titles will debut exclusively at BetMGM. Crypto casino Winz.io has entered into a new content partnership with Live88. GBO Italy has entered into a new partnership with 3 Oaks Gaming.
Kambi has announced a long-term partnership with the Oneida Indian Nation to provide its sportsbook solution to Turning Stone Enterprises’ three sportsbooks in New York. DraftKings has launched its Golden Nugget Online Gaming brand in Ontario.
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