Australia’s Aristocrat Leisure Limited has seen its share price tumble following a US federal court ruling against its social gaming platform, Big Fish Casino.
The ruling by Judge Milan D. Smith of the Ninth Circuit of the U.S. Court of Appeals overturned a 2015 case heard by district court in Seattle.
Under the original filing, Cheryl Kater sought to recover the $1,000 she spent, and subsequently lost, on Big Fish Casino chips.
Even Virtual Casino Chips Have a Value
The case was eventually dismissed after the judge ruled that the virtual casino chips aren’t the same as real ones. However, with Aristocrat’s 2017 acquisition of Big Fish Casino opening up the issue once again, Judge Smith has overturned the decision and ruled that the virtual casino chips do represent something of value.
Although the ruling is only limited to the state of Washington and related to Big Fish Casino’s former owner, Churchill Downs Incorporated, it has hit Aristocrat’s share price. The Australian gaming provider finally closed its $1.3 billion deal for Big Fish Casino’s parent company, Big Fish Games, in January of 2018.
That deal gave Aristocrat’s share price a boost, but things have since hit a downturn. When the markets opened on April 3, its value was down by four percent with the price of a single share dipping to $23.15.
Ruling Won’t Adversely Affect Aristocrat
Despite the decision that virtual casino chips are akin to gambling, the decision won’t adversely affect the company’s day-to-day operations. Because the ruling only applies in Washington, Aristocrat will still be able to run Big Fish Casino as a standalone operation without a gambling licence.
“It certainly will be worth keeping a close eye on how this situation develops over the coming months, but for now I don’t believe there is any reason to be overly concerned,” The Motley Fool analyst James Mickleboro wrote on April 3.
Prior to the Big Fish Casino incident, Aristocrat CEO Trevor Croker had been buoyant about the company’s future. As well as purchasing Big Fish Games, Aristocrat completed its $650 million takeover of Plarium in October 2017.
As well as predicting an increase in annual earnings from Plarium, Aristocrat will see a non-cash net benefit of approximately $8.4 million thanks to US tax reforms. With the rate set to drop by three percent compared to 2017, Aristocrat expects to see earnings improve in 2018.