A federal court in Nevada has ordered Light & Wonder (LNW) to cease distribution of its Dragon Train slots titles, but for now, the first online installment of the series, Dragon Train Chi Lin Wins, remains available on BetMGM Casino in New Jersey, Michigan, and West Virginia. The game launched exclusively on BetMGM in August and still features prominently in the top center of the casino’s lobby.
The court granted the preliminary injunction as part of a lawsuit against LNW by Aristocrat Gaming. The rival game developer has accused LNW of using trade secrets brought to it by Emma Charles, a game mathematician LNW hired in 2021. Charles had worked for Aristocrat from 2008 to 2017, during which time she helped with the development of that company’s Dragon Link.
The complaint points to various similarities between Dragon Link and Dragon Train. Aristocrat alleges that Charles violated a confidentiality agreement by supplying LNW with details of Dragon Link, which LNW allegedly then used to produce Dragon Train.
LNW’s stock price (Light & Wonder Inc 93,39 +4,39%) plunged on news of the injunction, from more than $112 per share to just over $90 at its lowest point on Tuesday. That represents a drop of nearly $1.8 billion in market capitalization. However, LNW has told shareholders—and the court—that Dragon Train’s contribution to its annual profits is in the tens of millions of dollars.
The newsletter Earnings & More cites analysts at Truist and Jefferies, saying that LNW has stopped distributing the game but won’t remove existing placements while it seeks the court’s clarification on the injunction.
Representatives for BetMGM and LNW declined to comment for this story.
Preliminary Injunctions Require Strong Support
LNW has issued a statement saying it “respectfully disagrees” with the court’s decision and plans to appeal the injunction. It also says it intends to proceed with a jury trial to decide the lawsuit.
However, a court will not issue a preliminary injunction unless the judge feels that the plaintiff stands a significant chance of winning. That likelihood is one of four standards of the “Winter test,” by which US courts traditionally weigh the merits of such an injunction. This requires that:
- The plaintiff’s case is likely to succeed on its merits,
- The plaintiff is likely to suffer irreparable harm while the case plays out in the absence of an injunction,
- The “balance of equities” (degree of hardship) tips toward the plaintiff, and,
- It’s in the public interest to issue an injunction.
Judge Gloria M. Navarro of the US District Court for the District of Nevada wrote in her order that Aristocrat’s complaint meets all four criteria. On the issue of likelihood of success, she came down firmly in Aristocrat’s favor, writing:
The Court […] finds it logical and reasonable to conclude Aristocrat is extremely likely to succeed in demonstrating L&W misappropriated Aristocrat’s trade secrets in its development of Dragon Train.
Evidence Includes an Apparent Paper Trail
Based on her ruling, Judge Navarro’s assessment of Aristocrat’s chances hinges on evidence the company presented to the court.
It’s not uncommon for a successful slot game to attract imitators. However, there are legally acceptable forms of imitation and other methods that constitute infringement. At issue in the case is whether Light & Wonder arrived at similar math for its game by reverse engineering Dragon Link, or whether it used secrets supplied by Charles.
One piece of evidence Navarro references in her ruling is a spreadsheet LNW used in developing Sky Train, a precursor to Dragon Train. Navarro writes that the creation date on that file is Nov. 12, 2013. That was during Charles’ tenure at Aristocrat and matches the creation date of Aristocrat’s original Dragon Link spreadsheet.
Also mentioned is an internal LNW PowerPoint document stating the desire to “preserve as many of the important elements” of Dragon Link as possible. Navarro writes that another spreadsheet contains a note that the sales pitch for Dragon Train is that it will be “just like Dragon Link, but cheaper and more depth for the real punter.”
Based on these and related pieces of evidence, Navarro’s analysis offers the assessment that there is “strong circumstantial evidence supporting the allegation that Ms. Charles began with a Dragon Link math spreadsheet and then made tweaks to it.”
Prior to the injunction, LNW estimated that its consolidated AEBITDA (cash flow) for 2025 would be $1.4 billion. In its statement on the ruling, it said that Dragon Train accounts for less than 5% of that and that it still expects to hit its target, regardless of the outcome.
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