Exclusive: Evolution facing Gibraltar licence “substance test” following NetEnt acquisition
Gibraltar Gambling Division and government enter “constructive discussion” to assess supplier’s ability to meet licensing obligations on peninsula
Live casino and slots supplier Evolution is facing a “substance test” review by authorities in Gibraltar following the change of control post-acquisition, EGR can exclusively reveal.
EGR has learned that the Gibraltar Gambling Division and Gibraltar government have begun negotiations with Evolution as part of its transfer of licence to Evolution control following its multi-billion-pound acquisition of its former live casino rival.
It is understood the regulator will assess whether NetEnt’s Gibraltar operations will meet the so-called “substance test” to allow Evolution to continue operating its Gibraltar gambling licence.
Under Gibraltar gambling laws, licensees are expected to establish “proportionate substance” in the jurisdiction, making an economic contribution to the Mediterranean gambling hub.
This substance test varies depending on the size and scope of the operator, but is assessed based on a combination of employees, office space, tax yield and IT infrastructure.
NetEnt operates as one of 36 licensed firms on the Rock, with a B2B gaming operator licence, while Evolution does not currently have a licence in Gibraltar.
As part of its takeover of the NetEnt brand, Evolution must make a change of control application, under which the regulator will assess the firm’s suitability to continue to operate the licence.
However, EGR has learned that NetEnt’s staffing levels on the Rock will be severely scaled back following the acquisition, from a headcount of around 20 to just a handful of employees.
“Whilst we respect the right of any company to structure its business to optimise efficiency, the Gibraltar licensing proposition is about a compromise between what the business wants and an assessment of the economic contribution it is prepared to make in Gibraltar,” Gibraltar Gambling Commissioner Andrew Lyman told EGR.
“We expect all of our B2B and B2C operators to meet an agreed substance test and Gibraltar is still a valuable jurisdiction for B2B suppliers in terms of revenue stream.
“Whilst we cannot discuss detail, we are in constructive discussions with representatives of the new Evolution structure around its commitment to Gibraltar both in the short and medium term.
“This discussion encompasses the existing acquired licensed business and wider business that has been subject to previous approval. We will be considering a change of control approval in due course,” Lyman added.
The revelations come less than 24 hours after Evolution settled its industrial dispute with Malta’s General Workers Union over more than 300 redundancies relating to the closure of the NetEnt Live brand.
As part of the settlement, Evolution has agreed to find roles for 40 NetEnt members of staff who had previously been set to exit the business under the restructuring proposals.