Evolution CEO Warns of Black Market Growth With 40% Tax Like in the UK

Evolution CEO Martin Carlesund has warned about the potential growth of unregulated gambling in markets with higher taxes, in the same month that higher online taxes began to be introduced in the UK.

From the start of April, remote gaming duty (RGD) in the UK, paid on online casino bets, increased from 21% of gross gaming yield (GGY) to 40%.

There will also be an increase in general betting duty, paid on online sports bets, in April 2027, from 15% to 25% of GGY, although this does not impact Evolution directly, as it is an online casino supplier.

“Really difficult” rates

Speaking on an earnings call following Evolution’s Q1 2026 results, Carlesund was reacting to a 12% year-on-year decrease in European revenue to €176 million (£152.3 million). Carlesund said Europe is the “main headache” and was asked how much of this was caused by unregulated gambling in the continent.

Carlesund said he

“wouldn’t necessarily draw that conclusion. There are other regulations in Europe that are not regulated or suffering, and there are regulated jurisdictions in Europe that are suffering.”

However, Carlesund touched on difficult tax costs in Europe, stating:

“As soon as you hit the 30% (tax) bracket, it starts to be really difficult. You open up for lower channelisation (rates) and unregulated play when you put taxes on 40% level.” This refers to the 40% RGD rate that has recently been applied in the UK.

Bottom line numbers

Evolution’s net revenue for Q1 dropped 1.5% to €513.04 million, while EBITDA fell 1.9% to €335.3 million. Despite the drop in net revenue, Evolution’s still posted a profit for the period of €251.9 million, although this was down 1.1%.

In March, Evolution announced it would not be paying a dividend to shareholders for 2025, with European regulatory conditions thought to have played a part in the decision. This followed the publication of Evolution’s full year results for 2025, which showed net revenue went up just 0.2%, to €2.07 billion.

Speaking about Evolution’s long-term prospects, Carlesund claimed:

“At Evolution, we never shy away. We stand up for what we believe in, we do what is right and we always push forward. While this can hurt a little in the short-term, our cost-efficient operations, discipline, and fantastic, hard-working talents give us the resilience to stay patient and focused on long-term value creation.”

UK license review

In December 2024, the Gambling Commission initiated a review into Evolution’s license, after the British regulator identified the supplier’s games were accessible from the UK via an unlicensed operator’s website.

Evolution’s games were made unavailable for UK players via the website in question after being informed of the investigation, and Evolution said it was cooperating with the Commission in an attempt to resolve the matter.

Carlesund previously estimated this license review was likely to be concluded by the end of 2025. However, the Commission’s findings are yet to be announced. Evolution said the outcome of the review may include sanctions or penalties, but the outcome is still unknown to Evolution.

Legal issue with Playtech

Last October, fellow supplier Playtech was revealed to be behind a secret investigation into Evolution, which was submitted to New Jersey and Pennsylvania gaming regulators in 2021.

The investigation accused Evolution of regulatory violations, and included allegations of operations in various black and grey markets. New Jersey and Pennsylvania’s gaming regulators closed their investigations in February 2024 without taking corrective action.