Light & Wonder CEO Says Company Pulling ‘Dragon Train’ Slots in North America

Posted on: October 4, 2024, 04:32h. 

Last updated on: October 4, 2024, 04:32h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Light & Wonder (NASDAQ: LNW) jumped 4.39% on above-average volume Friday after CEO Matt Wilson updated investors on the company’s next steps relating to “Dragon Train” litigation.

Light & Wonder
Light & Wonder CEO Matt Wilson. He said the company is working to convert “Dragon Train” slots in North America following a court order. (Image: LinkedIn)

In late September, Aristocrat Technologies won a preliminary injunction that bars Light & Wonder from further leases and sales of “Dragon Train” slots. Judge Gloria Navarro of the US District Court for the District of Nevada ruled Aristocrat is highly likely to prove its competitor “misappropriated Aristocrat’s trade secrets” from its “Dragon Link” games in developing “Dragon Train.”

In a video posted to L&W’s investor relations website, Wilson said the company is working with North American customers to pull “Dragon Train” machines and convert those devices to other titles offered by the gaming device manufacturer.

We’re working very diligently with customers to convert those games out, in compliance with the judge’s order,” he said. “We are working hard with customers to install these new games quickly so that Dragon Train is out of the fleet, and that’s our immediate priority.”

Wilson added Light & Wonder has 33,000 leased gaming machines in North America with “Dragon Train” devices accounting for a mid-single digit percentage of that group.

‘Dragon Train’ Australia Update

In North America, L&W is attempting to convert “Dragon Train” slots to titles such as “Dancing Drums,” “Invaders,” and “Wizard of Oz,” among others.

In Australia — Aristocrat’s home country — L&W halted sales of “Dragon Train” devices and Wilson said the company has been in contact with some customers about potential conversions to “Huff N’ Puff” and “Lion Link” machines as well as “Shenlong Unleashed,” which the company recently previewed at the Asian Gaming Expo.

“We’re really looking to make sure that we capture as much of that opportunity in the fourth quarter and beyond as we start to scale out new versions of our products,” said Wilson in the video.

L&W’s Dragon family of games found success with bettors in Australia, and some analysts said the new series could be a catalyst for upside to earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates. Aristocrat is pursuing litigation against L&W in that country and earlier this year, a federal court there granted it presuit discovery against L&W.

‘Dragon Train 2.0’ Plans

The Light & Wonder chief executive officer also told investors that the company is working on “Dragon Train 2.0” slot machines in compliance with the court order with the expectation that the game will be part of the firm’s product lineup for years to come.

“We’re working actively on this right now. It’s a very high priority for us,” noted the CEO. “We’re working quickly to get that out.”

Analysts have pointed out that “Dragon Train” represented just a small percentage of L&W’s earnings before interest, taxes, depreciation, and amortization (EBITDA). Wilson said it’s “just one of many successful franchises” the company creates, adding that L&W achieved top ship share in the North American market in the second quarter exclusive of “Dragon Train” commercialization.