Calling the matter “an isolated incident,” the CEO of gaming equipment provider Light & Wonder said the company is quickly removing some 2,200 slot machines from casinos throughout the U.S. and Canada after a federal judge granted a preliminary injunction in a trade secrets claim by a rival slot maker.
In an unusual 4-minute video message that was posted to the company’s website late Thursday, CEO Matt Wilson said Las Vegas-based Light & Wonder was working with North American casino operators to convert the Dragon Train slot machines to another game in the company’s portfolio.
In a late September ruling, U.S. District Judge Gloria Navarro granted gaming equipment provider Aristocrat Technologies’ request for a preliminary injunction in a trade secrets claim against Light & Wonder regarding the company’s Dragon Train slot machine product.
Australia-based Aristocrat claimed the game was a copy of its Dragon Link and Lightning Link games, alleging former Aristocrat game designers helped develop Dragon Train after leaving the company.
A transcript of Wilson’s message was filed with the Securities and Exchange Commission.
“We have a lineup of games from our deep portfolio of franchises … from which we can backfill these requests. We are working hard with customers to install these new games quickly so that Dragon Train is out of the fleet. That’s our immediate priority,” Wilson said on the video. “[I’m] happy to say to this point, we’ve not had a single removal request from customers.”
The ruling caused shares of Light & Wonder, which are traded on the Nasdaq National Market, to fall more than 19 percent. On Friday, shares were up more than 3 percent in morning trading.
Light & Wonder shares hit a 52-week high of $115 on Sept. 19. The shares fell to $87 on Wednesday and were back up to $89 on Thursday before the video statement was released.
Wilson said the slot machine designer who created the Dragon Train game was no longer with Light & Wonder.
With next week’s Global Gaming Expo (G2E), the gaming industry’s largest trade show and conference opening at the Venetian Expo, Wilson and Light & Wonder officials didn’t want the Dragon Train issue lingering.
He said the company plans to build a second version of the Dragon Train game that complies with the judge’s ruling.
“We’re working actively on this right now. It’s a very high priority for us and we’re working quickly to get that out,” Wilson said. “We expect Dragon Train will continue to be a franchise in our portfolio for many years to come.”
Wilson was the head of Aristocrat’s U.S. operations in Las Vegas before leaving in July 2019 to join Light & Wonder to oversee the games division. He is one of several former Aristocrat executives now at Light & Wonder, including chairman Jamie Odell and director Toni Korsanos.
Wilson was named CEO in October 2022, becoming the company’s fourth top executive in the previous seven years.
“The team is galvanized, they are excited about G2E next week, and we’re going to bring the best lineup the industry has ever seen,” Wilson said. “I’d like to reiterate that Dragon Train is just one of the many successful franchises that Light & Wonder creates. We develop more than 130 games every year.”
On Wednesday, Truist Securities gaming analyst Barry Jonas told investors in a research note that Light & Wonder expects the Dragon Train games would be gone from North American casinos by Oct. 23.
“We continue to believe Light & Wonder has a very diverse offering extending well beyond one game and features multiple growth drivers,” Jonas wrote.
Wilson said the company has approximately 33,000 slot machines leased to casinos in North America where Light & Wonder shares in a percentage of the gaming revenue.
This story will be updated with Friday’s closing stock price.
