Light & Wonder Inc (L&W) is facing significant legal and financial challenges due to the ongoing legal battle with Aristocrat Technologies Inc over the “Dragon Train” slot product. According to analyst David Bain, the total replacement costs for L&W to modify the disputed version of the product in the North American market could amount to US$28.6 million. Additionally, court-related damages and other legal remedies could cost the company anywhere between US$50 million to US$150 million.
Aristocrat was granted a preliminary injunction against L&W in Nevada, accusing the company of infringing on its intellectual property rights. L&W’s president, Matt Wilson, has stated that the company plans to build a new version of “Dragon Train” and replace the existing units in compliance with the court order.
The analyst estimates that L&W sold 4,800 units of “Dragon Train” in Australia and has approximately 2,200 units operating in North America on lease. The estimated replacement cost per unit, including installation, is around US$13,000. The company may also face additional costs related to court-ordered damages.
Despite the challenges, L&W remains optimistic about its future prospects. The company is actively working with customers to replace the affected units and has reiterated its guidance to investors, expecting to generate US$1.4 billion in EBITDA in 2025. The “Dragon Train” product accounted for less than 5 percent of this guidance, indicating a potential US$70 million contribution next year.
Bain also highlighted that recent merger and acquisition activity in the gaming technology market has positioned L&W as a unique player with valuable assets, including its market-leading systems business. The company’s stock has declined since the legal dispute with Aristocrat, but Bain believes that market sentiment may be overreacting to the situation.
Moving forward, L&W is focusing on developing a new version of “Dragon Train” and working on mitigating the financial impact of the legal battle. The company’s ability to navigate through these challenges and leverage its core strengths will be crucial in determining its long-term success in the gaming industry.