Light & Wonder Rallies on ‘Dragon Train’ Suit Update

Posted on: April 2, 2025, 04:29h. 

Last updated on: April 2, 2025, 04:29h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

• Company reaffirms 2025 EBITDA target of $1.4 billion
• Says it halted development of a new slot machine to address Aristocrat concerns

Shares of Light & Wonder (NASDAQ: LNW) gained 4.64% today on above-average volume after the slot machine manufacturer updated investors on litigation brought against it by rival Aristocrat Leisure.

The Wednesday gain arrived after the stock shed roughly 20% in a matter days as shareholders fretted the possibility of Aristocrat expanding its suit to include another Light & Wonder game. In February 2024, Aristocrat sued Light & Wonder with the former claiming the latter pilfered trade secrets from Aristocrat’s “Dragon Link” games in developing “Dragon Train.” That complaint was amended in July 2024 and last September, Aristocrat was granted a preliminary injunction on “Dragon Train” slots.

Light & Wonder acknowledged that Aristocrat is raising new legal issues, including that “Dragon Train” replacement games “’would reap the benefits’ of trade secret misappropriation even if none of the claimed trade secrets are used in such games.” One of the games in question is “Dragon Train Grand Central”, a social game that isn’t found on land-based casino floors.

We have been and will continue to be transparent with the courts and Aristocrat on the process to ensure that new games do not contain any of Aristocrat’s claimed trade secrets or confidential information,” according to a Light & Wonder statement. “We followed that process with our new social game, ‘Dragon Train Grand Central.’ We provided the math to Aristocrat in advance of the launch of the game.”

The Las Vegas-based company added that Aristocrat has made no claims pertaining to ‘Dragon Train Grand Central’ math and that it has halted development of a separate game that used a math model that may have prompted further inquiry from Aristocrat. Light & Wonder said it was out of an abundance of caution that it ceased working on that unnamed game.

Light & Wonder Financial Targets Remain in Tact

Amid the legal kerfuffle, Light & Wonder reaffirmed its 2025 EBITDA guidance, telling investors it’s still on pace to generate 2025 adjusted earnings before interest, taxes, depreciation, and amortization of $1.4 billion.

Light & Wonder also pointed out that it’s invested in research and development to broaden its portfolio of established slot games – an effort that’s paid off as the company had to replace “Dragon Train” machines in Australia and North America.

“We are extremely proud to have a robust and diversified portfolio of the best products in the market that gives us a competitive advantage not tied to any one game or franchise. We are grateful to our customers and stakeholders for their unwavering support as we continue to execute to strategy,” it said in the press release.

Aristocrat Makes ‘Jewel of the Dragon’ Claims

Light & Wonder told investors that for the first time, Aristocrat made claims on “Jewel of the Dragon” machines. As a result, the former is offering to replace those machines for clients. That move stems from PAR sheets, which contain a slot machine’s performance details, from 2015 becoming widely available.

Those sheets are provided by slot manufacturers to gaming clients as required by state regulators and as avenues for articulating to operators what their financial exposure is when large, rare jackpots hit. It’s not a heavy lift for Light & Wonder to remove the “Jewel of the Dragon” machines.

“For context, Jewel of the Dragon’s Premium installed base footprint is less than one percent (1%) of the total Premium installed base in North America, with approximately 150 premium leased units,” according to the statement.