Light & Wonder shares surged more than 16% at the open on the ASX after the company announced it had reached a settlement with rival Aristocrat Leisure Limited (ASX:ALL), resolving litigation in Australia and the United States over alleged misuse of intellectual property.
The companies agreed to settle claims brought by Aristocrat following the launch of Light & Wonder’s Dragon Train game, and later Jewel of the Dragon, which Aristocrat alleged were developed using its trade secrets and copyrighted material. Aristocrat shares were little changed in early trade.
Under the confidential settlement, Light & Wonder will pay Aristocrat US$127.5 million, or about A$190 million, in compensation relating to the claims of misappropriation and infringement.
Dragon Train and Jewel of the Dragon to be pulled globally
Light & Wonder acknowledged that certain Aristocrat math information was used in the development of both Dragon Train and Jewel of the Dragon. As part of the agreement, the company will permanently cease commercialising the games globally and make best efforts to remove existing installations.
It has also agreed not to make any further use of the Aristocrat math information or copyright works at issue, and to permanently destroy all documents reflecting that information.
The parties have agreed to confidential procedures to identify and resolve any issues concerning the use of Aristocrat math in connection with certain existing Light & Wonder hold-and-spin games, as well as titles currently in development, including games for which Light & Wonder was ordered to produce math models during the US litigation.
Aristocrat’s claims against Light & Wonder in Australia and the United States will be dismissed.
Aristocrat chief executive and managing director Trevor Croker said the company welcomed fair competition but would continue to robustly defend its intellectual property.
“As an ideas and innovation company our intellectual property is vital to our ongoing success,” Croker said. “We welcome this positive outcome, which includes significant financial compensation and follows the decisive action we took to ensure the preservation of Aristocrat’s valuable intellectual property assets.”
Light & Wonder chief executive Matt Wilson said the company was pleased to resolve the matter and move forward.
“This matter arose when a former employee inappropriately used certain Aristocrat math without our knowledge and in direct violation of our policies,” Wilson said, adding the company had taken immediate action and strengthened internal processes to prevent a recurrence.
Overhang removed
Analysts said the settlement removes a major legal and operational overhang for both companies. Jarden analyst Liam Robertson described the outcome as positive for Light & Wonder, noting the compensation was within expectations, although the full operational impact remains unclear given the challenge of removing some installations globally.
Robertson estimates the payment provides Aristocrat with a 1-off 9% boost to FY26 earnings per share, while for Light & Wonder the payout was largely priced in, with the clean settlement helping to derisk its operations. Jarden maintains buy ratings on both stocks, with 12-month price targets of $72 for Aristocrat and $177 for Light & Wonder.