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Read Full BioLight & Wonder (NYSE: LNW) stock jumped over 10% yesterday after a favorable court ruling in its legal dispute with Aristocrat Leisure Limited (ASX: ALL).
Meanwhile, Aristocrat’s shares dropped 2% yesterday and continued falling today, down by an additional 0.38%.
Background: Copyright Dispute Over Slot Game Designs
Light & Wonder, previously known as Scientific Games Corporation, creates and distributes gaming content, hardware, and systems.
Australia-based Aristocrat Leisure Limited is also in a similar line of business, and in 2024, it filed a lawsuit against LNW, accusing it of copyright infringement.
Specifically, it accused some elements in the design of Light & Wonder’s Dragon Train game of being copied from its intellectual property. The Federal Court of Australia granted the company pre-suit discovery against LNW.
Aristocrat also filed a five-count complaint in the U.S. District Court of Nevada. In September 2024, Judge Gloria M. Navarro granted its motion for a preliminary injunction on its trade secret claims against Light & Wonder.
The court enjoined LNW from “any continued or planned sale, leasing, or other commercialization of Dragon Train.” Expectedly, Light & Wonder appealed that preliminary injunction.
In February 2025, the Federal Court of Australia rejected Aristocrat’s request for an interlocutory injunction against Light & Wonder, allowing the latter to continue selling Dragon Train games in the country.
Light & Wonder Voluntarily Withdrew “Jewel of the Dragon”
In April 2025, Light & Wonder announced that it would voluntarily cease commercializing “Jewel of the Dragon” slot machines following a second amendment complaint by Aristocrat.
The company identified that some Aristocrat PAR sheets (which are like blueprints for a slot machine) dated 2015 were made available to specific team members working on the development of Jewel of the Dragon.
“Our internal review processes identified that an early version of this game’s math model potentially presented issues relating to Aristocrat,” said Light & Wonder in its release.
It extended its review to all games released before mid-2021, adding that it has no reason to believe there is a similar issue with other games.
The company concluded its review last month and stated that it did not identify any other instances of misappropriation.
Aristocrat wasn’t impressed with the results and said Light & Wonder did not provide the complete lists of projects that Emma Charles, whose work was the core of its lawsuit, worked on.
In March 2025, concerns about additional lawsuits related to other games led to a 20% decline in LNW’s share price over just five days. Still, analysts at Macquarie called the market reaction “overdone,” estimating limited financial exposure and reaffirming confidence in LNW’s target of $1.4 billion in 2025 EBITDA.
Court Victory: Narrowed Scope of Discovery
Light & Wonder received a major legal victory yesterday after the Nevada district court hearing the case found Aristocrat’s discovery request too broad.
It ruled that Light & Wonder wasn’t obligated to disclose the math models for all the games that Aristocrat was seeking. It asked Aristocrat to be specific about the trade secrets it wanted to protect under the litigation.
Markets viewed the legal victory as a reprieve for LNW, sending the stock up over 10% yesterday.
Thanks to yesterday’s rally, the stock is now up 9.4% for the year as of yesterday’s close and is outperforming the S&P 500 Index, despite its returns being under half those of the Roundhill Sports Betting & iGaming ETF.
Analyst Reactions: “Incremental Positive,” But Limited Financial Impact
While LNW rallied sharply yesterday, analysts don’t see the court’s decree moving the needle financially for either of the companies.
While Jefferies Equity Research analyst David Katz said the court decree “is an incremental positive” for LNW, he added, “We view the case generally as background noise in the near term, financially limited.”
Katz believes that Light & Wonder might need to pay a significant sum to Aristocrat, but stressed that it might be meaty enough to change his views of either company.
According to Katz, “The competition between the two companies is intense, given their positioning as the only two large-scale game developers globally and the number of people at Light & Wonder that were formerly at Aristocrat.”
Despite considering the case to have limited financial implications, the analyst maintains a Buy rating for LNW, setting a price target of $116 per share, over 20% higher than the current price. This decision is expected to positively influence investor confidence in Light & Wonder.
Macquarie, which has an Outperform rating on LNW, recently raised its target from $120 to $122, citing strong fundamentals and manageable legal risks.
The firm’s target price is considerably higher than LNW’s mean target price of $107, which is approximately 13% higher than the current prices.
Outlook: What’s Next for LNW and Aristocrat?
The legal case is far from over. Although none of the companies have publicly commented on the court decree so far, many believe that Aristocrat will appeal the decision.
Still, the court’s ruling gave investors renewed confidence in LWN’s position, particularly since it had no impact on its financial guidance.
