Light & Wonder sharese has fallen nearly 20% recently on rumours of additional Aristocrat litigation, according to analysts at Macquarie.
Light & Wonder’s share price has fallen nearly 20% over the past five days on rumours of additional Aristocrat litigation, according to analysts at Macquarie.
The analysts said the share price decline has been driven by fears that a second Light & Wonder game, Jewel of the Dragon, could be subject to ongoing trademark misappropriation and copyright infringement litigation involving Dragon Train.
It follows the US land-based and iGaming supplier being ordered by a Nevada District Court to cease profiting off its Dragon Train game in September last year, which resulted in a significant share price decline.
After speaking to management, the analysts said they believed there had been “additional legal communication” regarding Jewel of the Dragon, which led Light & Wonder to pre-emptively approach the issue.
In a legal filing submitted earlier in the month, Aristocrat said Light & Wonder has not produced an adequate list of games that former employee Emma Charles, whose work is at the centre of the lawsuit, worked on.
The filing said: “L&W, which is headquartered in Nevada, has committed both domestic acts of misappropriation (e.g., storing stolen Aristocrat game math on US servers and using Aristocrat trade secrets in the US and domestic acts in furtherance of misappropriation elsewhere (e.g., L&W’s senior management in the US overseeing the development of Dragon Train).
“And under the Copyright Act, Aristocrat is “entitled to recover damages flowing from exploitation abroad of the domestic acts of infringement committed by” L&W, including its development of Jewel of the Dragon (the game accused of infringing Aristocrat’s copyrighted works) in the US.”
Jewel of Dragon mentioned in original Aristocrat complaint
The Australian slots giant had mentioned Jewel of the Dragon in its initial February 2024 complaint against its competitor.
Elements that are allegedly copied include original audiovisual elements and its distinctive trade dress, which Aristocrat said resulted in a game whose “artwork, animations, and sounds are strikingly similar to Dragon Link”.
Macquarie said its conversation with management indicated Jewel of the Dragon is only a fraction of the size of the Dragon Train fleet and that no material impact is expected financially.
The analysts said: “This raises the question of why [Aristocrat] might be pursuing further legal action towards Jewel of the Dragon when signs point to any potential impact to LNW’s business as de minimis.
“We are not going to speculate here, but we think the main takeaway is that LNW’s exposure with Jewel of the Dragon should be significantly lower than with Dragon Train.
“As it stands, our view is that this development does not derail LNW’s path to reaching its $1.4bn 2025 EBITDA target”.