Vegas gaming company clearing out all ‘Dragon Train’ slot machines

Las Vegas gaming equipment manufacturer Light & Wonder has begun removing its approximately 2,200 Dragon Train-themed slot machines from North American casinos in compliance with a September court order.

But the company says it intends to replace Dragon Train with other branded machines and will press ahead with development of Dragon Train 2.0, the next version of the machine.

Light & Wonder CEO Matt Wilson, in a video statement on the company’s website, said the designer of Dragon Train is no longer with the company. Two Dragon Train game designers formerly worked for Aristocrat.

U.S. District Court Judge Gloria Navarro on Sept. 24 granted Australia-based Aristocrat Technologies Inc.’s request for a temporary injunction blocking “continued or planned sale, leasing, or other commercialization of Dragon Train,” which Aristocrat contends uses intellectual property developed for its Dragon Link and Lightning Link games and that what Light & Wonder produced was “a cheap knockoff.”

Oct. 23 deadline

According to the order, Light & Wonder has until Oct. 23 to remove the games.

Wilson disagrees, but said the company would comply with the order.

“We have approximately 33,000 leased units installed in the market, and Dragon Train represented a mid-single-digit percentage of that install base, or roughly 2,200 units,” Wilson said. “We’re working very diligently with our customers to convert those games out in compliance with the judge’s order. Happy to say at this point we’ve not had a single removal request from our customers, and we have a line-up of great games from a deep portfolio of franchises such as Ultimate Fire Link, Invaders (Attack Again from the Planet Moolah), Dancing Drums, Huff n’ Puff, Wizard of Oz, and many more that we’re working on, from which we can backfill these requests.”

When the judge issued the injunction, Light & Wonder stock plunged.

Barry Jonas of Atlanta-based Truist Securities issued a report to investors Wednesday that said he is confident Light & Wonder will be able to generate revenue with its diverse portfolio of games despite the 22 percent decline in the value of company stock.

“We believe this IP issue is specific and limited to this designer and the game Dragon Train,” Jonas said in his note. “LNW has now separated from the designer and the question is to what extent is (Aristocrat’s) IP responsible for the success of the game.”

Truist has continued to give the company shares a “buy” rating.

“We believe LNW is already in discussions with various operators about replacing Dragon Train placements with alternative LNW games across a large portfolio, and LNW has said Dragon Train represents less than 5 percent of its 2025 (adjusted cash flow) target while reiterating the target excluding any mitigation efforts,” Jonas said.

He said he’d have more commentary after next week’s Global Gaming Expo where manufacturers from around the world will gather in Las Vegas.

Investigation underway

Meanwhile, a San Francisco law firm is soliciting information from Light & Wonder investors and prospective whistleblowers to investigate the company’s role in the declining stock valuation, usually a first step toward filing a class-action lawsuit on behalf of shareholders.

“The court’s decision reportedly found that Aristocrat is ‘extremely likely to succeed in demonstrating [Light & Wonder] misappropriated Aristocrat’s trade secrets in [Light & Wonder’s] development of Dragon Train,’” a release from the Hagens Berman law firm says. “The court also reportedly said that Light & Wonder ‘was able to develop Dragon Train without investing the equivalent time and money.’”

“We are looking into whether Light & Wonder may have knowingly misled investors about the propriety and legality of its reported gaming revenue growth,” said Reed Kathrein, the Hagens Berman partner leading the investigation.

Light & Wonder shares closed Friday at $93.39 a share, up $3.93 or 4.4 percent per share from the previous day on slightly-above-average volume. On Sept. 24, shares fell from $113.72 to $90.41 and $1.3 billion in company market value was wiped out after the court ruling was made public.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.