Evolution’s Largest Shareholder Triggers Potential Takeover Bid

About a week after Evolution terminated its deal to acquire table game manufacturer Galaxy Gaming, Evolution’s largest shareholder has upped his stake in the Swedish gaming firm, triggering a potential takeover bid.

U.S. investor Kenneth Dart, through his Cayman Island-based firm Candle Lake Ltd., has acquired 2.05 million shares in Evolution, bringing his total to 59.8 million shares, according to a news release.

Under Chapter 3 Section 1 of the Swedish Act on Public Takeovers, anyone passing 30% of shares in a listed company must disclose it and has four weeks to submit a bid for the remaining shares or reduce its holding to below the 30% threshold.

Evolution, which provides online games for the worldwide iGaming market, did not respond to a request for comment on Candle Lake’s share purchase.

Dart’s firm has also built a substantial stake in Flutter Entertainment, which owns FanDuel and Paddy Power among several other gaming brands, at 28.9% through direct shares and equity swaps.

Staying in its own galaxy

When Evolution terminated its acquisition of Galaxy last Tuesday, the decision was attributed to delays in achieving all regulatory approvals and an admission that the deal wasn’t vital to the gaming technology company’s future.

The deal was first announced in July 2024, with Evolution agreeing to acquire all 25 million outstanding shares of Galaxy in an all-cash transaction valued at $85 million. But after two years, regulatory approvals from Nevada and Louisiana had not been obtained.

“Galaxy Gaming, who holds a gaming supplier permit in Louisiana, and Evolution Malta Holding Limited filed a joint petition with the Louisiana Gaming Control Board for approval of an agreement and plan of merger,” Lisha Landry, the LGCB’s confidential assistant, told Casino Reports in an email.

“As of this date,” Landry said, “the LGCB has taken no action on this request.”

Landry did not say if the request for approval of the deal had been pulled, but did confirm that Evolution was not “licensed or permitted” by the control board.

Insignificant acquisition

Evolution announced its decision to terminate the deal after comments made by CEO Martin Carlesund that the deal wasn’t significant to the business.

“Two years have passed, and Evolution has spent significant rime, effort, and resources handling the rather large amount of administration required to close this transaction,” Carlesund said in a statement announcing the company’s second-quarter earnings.

Carlesund added that due to Galaxy’s size, “this transaction is not significant for Evolution and the outcome has no material impact on our existing business, our U.S. operations, or our long-term ambitions.”

Evolution, which is licensed and regulated by the Malta Gaming Authority, has a large presence in Europe and Asia, with a U.S. presence providing live table games for operators including DraftKings and Hard Rock Bet.

Evolution also did not respond to a request for comment on if it intends to pursue approval of a gaming supplier license in Nevada.

In December 2024, Galaxy CEO and President Matthew Reback told the Nevada Gaming Control Board (NGCB) during his licensing hearing that Evolution was a “big customer” of theirs but that the closing of the deal “is all depending on the application process.”

Jennifer Morton, NGCB’s public information officer, told Casino Reports the agency does not comment on any individual or company other than those comments or questions that are made and discussed at the monthly board or commission hearing.

Earlier this year, the NGCB issued an industry notice that outlined its expectations for online gaming operators and suppliers. The notice was after the U.K. Gaming Commission launched its investigation into reports that Evolution games were on unlicensed sites in the U.K.

The brands involved were Evolution, Red Tiger, NetEnt, and Ezugi. Last week, the commission issued a statement announcing Evolution had agreed to pay a 4.75 million pound settlement after the agency confirmed the presence of the company’s games on illegal websites.

“The case exposed serious weaknesses in Evolution’s money laundering risk assessment and its oversight of risks within its supply chain,” said John Pierce, commission director of enforcement. 

In Nevada, the control board expects all licensees to do their due diligence before entering a jurisdiction regardless of the commercialization approach and regardless of whether the offering occurs from within or outside the jurisdiction.

There is a presumption that a jurisdiction is prohibited if it has applicable laws that expressly prohibit online gaming offered either from within or outside the jurisdiction, according to the control board.

Among the examples of countries that are presumptively prohibited are Australia, China, Cuba, India, Indonesia, Iran, Russia, Saudi Arabia, Syria, and Thailand. Evolution does not operate in any of the prohibited countries, according to a list on its website of countries in which it operates.

It’s unclear if Evolution’s issues with the U.K. gaming regulators would have made it more difficult to acquire a license in Nevada or would have led any potential license to have been approved with conditions.