According to analysts at Truist Securities, the designer of Light & Wonder’s Dragon Train game is no longer with the business.
The Dragon Train lead developer Emma Charles, who previously worked at Aristocrat, had been accused by the supplier of using the underlying math model behind its own Dragon Link offering to create the game.
It follows Aristocrat successfully getting the Nevada District Court to impose an injunction on Light & Wonder from profiting from Dragon Train.
The order led to an approximately 20% decline in share price despite Light & Wonder issuing a statement reiterating its $1.4bn 2025 adjusted EBITDA guidance.
Charles worked as a senior game designer at Aristocrat from December 2008 to October 2012.
After this she worked on a secondment for the business to High Roller Gaming (HRG) which develops games exclusively for Aristocrat.
In this capacity she worked on the Lightning Link and Dragon Link games that have been the centre of the dispute.
The original complaint said: “While at Aristocrat and HRG, Ms. Charles worked extensively on Lightning Link and Dragon Link and thus had unfettered access to, and was knowledgeable about, highly confidential information relating to these games, including details of the underlying math and functionality.
“Ms. Charles has firsthand knowledge of Lightning Link and Dragon Link’s success and the features responsible for that success.”
Aristocrat highlighted the existence of confidentiality agreements between and Charles following her exit from the business.
Two other employees that jumped ship to Light & Wonder were also named in the lawsuit, comprising an artist and a games designer.
The latter, Dinh Toan Tran, is accused of downloading “an extensive cache of Aristocrat trade secrets” to a personal device before he left, including 6,800 files.
Aristocrat is separately pursing legal action against Tran in Australia, where a court has ordered a seizure of his personal devices.
Truist say Dragon Train IP issue ‘specific and limited’
Analysts at Truist, including managing director Barry Jonas, said they believed the IP issue is specific and limited to Dragon Train and its designer.
They added that they believed there could be alternative mathematical models for the game, arguing it holds unique features that have not been challenged in court.
The analysts said they believed Light & Wonder is already in discussions with operators about replacing Dragon Train with other games from its portfolio.
Calling the 22% decline in Light & Wonder’s share price since the court ruling “overdone”, the analysts added that the business has a diverse offering extending beyond one game with multiple growth drivers.
Truist therefore reiterated its Buy rating and said it would have more information next week, when it plans to host a lunch with Light & Wonder senior management.
The court clarified its injunction to Light & Wonder this week and outlined that the business must remove all existing leased units by 23 October.
Aristocrat has previously argued in court filings the company was dragging its feet on the order.