Scientific Games Agrees to Pay $151.5M in Settlement, Reducing Penalties in Federal Lawsuit

Scientific Games announced Wednesday that it had agreed to pay $151.5 million in order to settle a federal antitrust lawsuit with four companies over efforts it made to keep other automatic card shufflers out of the market.

Card shuffling machines, like this one seen at the Horseshoe Casino Baltimore, were at the center of a federal antitrust lawsuit aimed at Scientific Games. (Image: Lloyd Fox/Baltimore Sun)

The settlement negates an existing jury verdict that would have cost the company $335 million.

Federal Judge Had Tripled Damages

Initially, the jury awarded the four firms that had sued Scientific Games a total of $105 million. That amount was tripled by a federal judge, after which legal fees and other costs were added to come to the $335 million total.

The plaintiffs, which included Shuffle Tech International, accused Scientific Games of engaging in “sham patent litigation” in order to prevent competitors from selling their own card shuffling devices.

“While we firmly believe that the jury decision was wrong, we are pleased with the outcome of the settlement and that this matter will be resolved for good,” Scientific Games chief legal officer and executive vice president James Sottile said in a press release.

According to the release, the settlement in contingent on the trial court vacating the existing judgement, though Scientific Games expects that to happen. Should the settlement go through, all litigation on the matter will be ended immediately. Scientific Games is not admitting any liability as a part of the settlement.

Settlement Prevents Lengthy Appeals Process

While slashing the amount of the judgement by more than half was certainly a motivating factor for Scientific Games to settle, Deutsche Bank gaming analyst Carlo Santarelli believes that the manufacturer may also want to put the entire dispute behind them.

“While Scientific Games noted in the press release [that] they disagreed with the initial jury award, we understand the litigation and appeals processes could have continued into late 2020,” Santarelli said, according to CDC Gaming Reports. “Thus [the company] preferred to settle so that management could focus on operating the business going forward.”

Along with Shuffle Tech, which was awarded $45 million, the jury had also awarded $25 million to Poydras, $15 million to Aces Up, and $20 million to DigiDeal before the judgement was tripled.

During the trial, jurors heard testimony that Shuffle Tech had worked with DigiDeal to manufacture a shuffling machine. However, after the companies showed off their new technology at the Global Gaming Expo, SHFL Entertainment – now a subsidiary of Scientific Games – filed a patent infringement suit against them, despite the fact that Shuffle Tech believed the patents to be unenforceable.

Stock in Scientific Games rose more than four percent in aftermarket trading on Thursday following news of the settlement, after which the price remained largely flat on Friday.

News of the settlement comes a day after vice-chairman Galvin Isaacs announced that he would be leaving the board of Scientific Games. There was no indication that the decision was related to the antitrust lawsuit or the ensuing settlement.

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