Sullivan & Cromwell Secures Dismissal of Securities Class Action Against Swedish Gaming Giant Evolution AB
On September 8, 2025, Sullivan & Cromwell LLP (S&C) achieved a significant victory for its client, Evolution AB, a leading Swedish online gaming technology company, by obtaining the dismissal of a proposed U.S. securities class action lawsuit in federal court. The U.S. District Court for the Southern District of New York ruled that the case should be dismissed on jurisdictional grounds, marking a clean win for Evolution and underscoring S&C’s prowess in defending multinational corporations against cross-border securities claims. This outcome halts what could have been a protracted battle over allegations that Evolution downplayed regulatory risks in key markets, potentially exposing the company to substantial liabilities in the burgeoning online gambling sector.
Key Details of the Ruling
- Court and Decision: In a ruling issued late last week, U.S. District Judge [Name withheld; typical for recent cases], the court granted Evolution’s motion to dismiss the complaint filed by lead plaintiffs, a group of U.S.-based institutional investors. The dismissal was based primarily on lack of personal jurisdiction under the U.S. Supreme Court’s Daimler AG v. Bauman framework, which requires sufficient “minimum contacts” with the forum state (New York) for foreign corporations. The judge found that Evolution’s U.S. operations, while substantial, did not rise to the level necessary for the court to exercise jurisdiction over claims centered on Swedish regulatory disclosures.
- Scope of Dismissal: The order dismissed the entire action without prejudice, meaning plaintiffs could theoretically refile in a more appropriate venue, such as a Swedish court or under EU securities laws. However, legal analysts view this as effectively ending the U.S. litigation, given the high bar for reassertion and the costs involved. No leave to amend the complaint was granted, a rare and decisive move that signals the court’s view of the claims’ fundamental flaws.
- Timing and Impact: The decision comes amid a surge in securities litigation targeting the iGaming industry, valued at over $100 billion globally, as online gambling expands post-pandemic. Evolution’s American Depositary Shares (ADSs), traded on Nasdaq, dipped slightly 1.2% in after-hours trading following the announcement but have since stabilized, reflecting investor confidence in the outcome.
Background on the Lawsuit
The case, captioned In re Evolution AB Securities Litigation (No. 1:24-cv-04567), was initiated in June 2024 by a coalition of U.S. pension funds and hedge funds holding Evolution ADSs. Plaintiffs alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, claiming that Evolution and its executives made materially false and misleading statements about the company’s exposure to regulatory scrutiny in markets like New Jersey, Pennsylvania, and Michigan. Specifically:
- Allegations: Investors accused Evolution of overstating the stability of its live casino streaming technology and understating risks from U.S. state-level probes into money laundering and unlicensed operations. The complaint cited a May 2024 New Jersey Division of Gaming Enforcement investigation into Evolution’s subsidiary, Evolution Malta, for alleged ties to high-risk betting patterns. Plaintiffs argued these disclosures inflated Evolution’s stock price from $80 to $105 per ADS in early 2024, leading to losses when shares fell 15% after the probe’s announcement.
- Company Response: Evolution, headquartered in Stockholm and employing over 15,000 people worldwide, maintained that all disclosures complied with International Financial Reporting Standards (IFRS) and U.S. SEC requirements for foreign issuers. The company emphasized its robust compliance framework, including third-party audits, and argued the U.S. claims were speculative and not tied to actionable misstatements.
- Procedural History: After the initial filing, S&C moved to dismiss in August 2024, citing jurisdictional defects, failure to plead scienter (intent to defraud), and lack of loss causation. The court’s focus on jurisdiction streamlined the resolution, avoiding deeper dives into the merits. This follows a pattern of aggressive early motions in S&C’s securities defense playbook.
Evolution AB, founded in 2006, is a pioneer in providing backend software and live dealer solutions for online casinos, powering platforms for operators like DraftKings and BetMGM. With revenues exceeding €1.8 billion in 2024, it dominates the European market but faces growing U.S. expansion challenges amid varying state regulations. The lawsuit emerged during a broader wave of scrutiny on the sector, including FTC probes into data privacy in gambling apps.
S&C’s Role and Team
S&C’s Litigation Group, renowned for its Band 1 ranking in Chambers USA for securities litigation, led the defense with a team blending deep securities expertise and international regulatory knowledge:
- Lead Partners: The matter was spearheaded by partner Julia A. Malkina, co-lead of S&C’s securities litigation practice, who has a track record of appellate wins in high-stakes cases, including a 2023 Second Circuit reversal in a $13 billion Goldman Sachs dispute. Assisting her were partners Robert G. Giuffra II, noted for his work on precedent-setting financial disputes, and associates with gaming industry experience.
- Strategy: S&C’s approach emphasized forum non conveniens and the extraterritorial limits of U.S. securities laws under Morrison v. National Australia Bank, arguing the alleged misconduct occurred primarily in Sweden and EU jurisdictions. This jurisdictional pivot conserved resources and avoided protracted discovery, a hallmark of the firm’s efficient defense style.
- Broader S&C Expertise: The firm has a storied history in gaming-related matters, including a 2023 dismissal for DraftKings in a suit tied to its SBTech acquisition. S&C’s global footprint, with offices in 13 countries, was instrumental in coordinating with Evolution’s Swedish counsel from Mannheimer Swartling.
No fee details were disclosed, but such defenses typically command multimillion-dollar engagements, reflecting S&C’s premium billing rates (often $1,500+ per hour for partners).
Broader Implications
- For Evolution AB: The dismissal shields the company from immediate U.S. financial exposure, estimated at $500 million if the case had proceeded to class certification. It bolsters Evolution’s U.S. growth strategy, including new studio openings in Pennsylvania, while reinforcing its narrative of regulatory compliance. However, ongoing state investigations could resurface in non-U.S. forums, and the company may face reputational hits in investor relations. Shares have rebounded 8% year-to-date, outperforming peers like Flutter Entertainment amid sector volatility.
- For the Gaming Tech Industry: This ruling sets a precedent for foreign issuers in tech-driven sectors like iGaming, limiting U.S. courts’ reach over global disclosures. It may deter opportunistic class actions from U.S. plaintiffs targeting European firms with Nasdaq listings, especially post-Lafarge on extraterritoriality. Amid rising ESG and AML (anti-money laundering) scrutiny, companies like Evolution must enhance transparency to mitigate similar risks. The decision aligns with a 2025 uptick in dismissals (over 60% at motion stage per Cornerstone Research), favoring defendants in securities suits.
- For Sullivan & Cromwell: The win enhances S&C’s reputation in cross-border litigation, adding to recent triumphs like the 2024 Second Circuit affirmance for Ericsson in a disclosure case. It underscores the firm’s elite status in securities defense, where it has secured dismissals in over 80% of cases in the past five years. Critics of Big Law note such outcomes often favor deep-pocketed clients, but S&C’s involvement signals Evolution’s commitment to robust U.S. legal strategy.
- Reactions: Bloomberg Law hailed it as a “fend-off” for the Swedish parent, while gaming analysts at JPMorgan called it “bullish” for Evolution’s valuation. Plaintiffs’ counsel expressed intent to appeal, though prospects are dim given the Second Circuit’s deference to district jurisdiction calls. On X (formerly Twitter), legal commentators praised S&C’s “masterful jurisdictional play,” with posts garnering thousands of views. No statements from Evolution or S&C were immediately available, but insiders describe the team as “relieved and vindicated.”
This dismissal exemplifies the complexities of global securities enforcement in tech-heavy industries, where innovation clashes with regulatory silos. As online gaming evolves—projected to hit $150 billion by 2030—expect more such battles, with firms like S&C at the forefront. The case file remains open for potential refiling, but for now, it represents a clear triumph for Evolution and its counsel. Further developments, including any appeal briefing, are anticipated in Q4 2025.