Scientific Games and Paradise Entertainment still at odds
A recent announcement that all litigation between Scientific Games and Hong Kong-based Paradise Entertainment was settled has not ended the long-running dispute between the two companies over patent rights claimed by Paradise subsidiary LT Game for live-dealer electronic table games.
The dispute between the two suppliers dates back to 2009, when LT Game first filed a patent lawsuit in Macau against the former SHFL Entertainment, now part of Scientific Games. The dispute involved SHFL’s Rapid Baccarat product, a hybrid system involving a live-dealer game beamed to electronic play stations. LT Game claimed two patents in Macau that they said gave them the exclusive right to sell this type of hybrid product in the SAR.
The litigation has gone through victories, appeals and dismissals on both sides, and boiled over most famously at the 2012 edition of the G2E Asia, when LT Game secured an injunction from a Macau court ordering SHFL to cease and desist from displaying the Rapid product—forcing company officials to cover the games with sheets at their trade-show booth.
Early this month, the Macau division of Scientific Games, formerly SHFL Macau, withdrew its last legal claim against the Macau patents of LT Game for hybrid live-dealer table games. SHFL Macau was ordered to pay court costs in the litigation.
However, events of the past two weeks indicate that the dispute between the two suppliers is far from over.
Paradise went on record last week objecting to a comment from Derik Mooberry, executive vice president and group chief executive of gaming for Scientific Games, that the courts had ruled in favor of the former SHFL Entertainment in the litigation involving a dealer-assisted electronic table games.
In a panel at the G2E Asia trade show in Macau, Mooberry claimed victory in the case. “The courts have ruled in our favor,” he said. “We feel we can deploy any electronic table product we like (in Macau), and have been told exactly that.”
Last week, Paradise Entertainment disputed that claim in a filing with the Hong Kong Stock Exchange, saying, “No decision was granted by the Macau courts in favor of Scientific Games Corp/SHFL Entertainment (Asia) Ltd… regarding the right to sell any electronic table game in the Macau market.
“The board of directors of the company noted the news… in which Mr. Derik Mooberry, executive vice president and group chief executive of gaming at Scientific Games Corp., stated that the courts have ruled in their favor regarding the right to sell any electronic table game in the Macau market, and the board would like to declare that the allegations made therein are untrue.”
Paradise added that a separate patent dispute in the Macau court over the games is “pending for trial and, therefore, is pending for the decision to be made.”
In an email to GGRAsia, a spokeswoman for Scientific Games said SHFL Entertainment Asia had voluntarily withdrawn its “unfair competition” claim against Paradise Entertainment and related parties because the objectives it had sought in bringing the lawsuit had been achieved. The position of Scientific Games was that the courts had found no evidence of any SHFL table product being in breach of any patent held by LT Game.
The apparent continuation of the patent dispute takes on new significance in light of the fact that electronic table games happen to be surging in Asia. Union Gaming’s fifth annual update on electronic table games (ETGs) in Asia shows continued annual growth, which the report attributes to a shift in the customer base from the VIP market to more mass-market gamblers.
The report says that stand-alone ETGs, typically in eight-seat configurations, have grown not only in newer markets like Singapore, but in more mature markets such as Macau and the Philippines.
“Following two years of revenue declines in Macau, we have begun to see some new and significant emerging trends as it relates to ETGs,” the report said. “Specifically, stand-alone ETGs have taken market share away from stadium-style machines, even as the absolute number of stadium-style seats has grown.
“The largest beneficiaries of this market share shift in Macau have been three privately held companies: Aruze Gaming, Jumbo (Taiwan), and Spintec (Slovenia). These three companies collectively picked up nearly 600 bps of market share on a base of more than 6,300 seats over the last 12 months.
“We believe this shift is being driven, at least temporarily, by an abundance of traditional live mass-market tables as operators continue to reallocate tables away from VIP and into mass.”
The report estimates that there will be nearly 3,100 new ETG seats in Asian markets over the next three years, with a revenue opportunity of around US$62 million.
