Electronic pull-tab machines supplied by Grover Gaming, a Light & Wonder subsidiary, were disabled in Kentucky on November 21 after regulators linked the devices to a cheating scheme. The pause drew attention to Grover’s role in the state’s charitable gaming sector and prompted fresh analysis of how the interruption might affect Light & Wonder’s financial outlook.
The Kentucky Horse Racing & Gaming Commission ordered every Grover unit taken offline, citing vulnerabilities that allowed individuals to exploit the machines through a method known as “fishing.” Jefferies Equity Research analyst Kai Erman noted in a November 25 report that “These individuals appear to be unrelated to Light & Wonder, with machines shut down due to failure to provide electronic pull-tab devices ‘equipped with adequate security equipment and software,’” according to regulators.
Regulators Cite Security Failures While Courts Intervene
Erman wrote that multiple machines were involved and that the illegal activity reached into the thousands of dollars. Regulators stated that the machines must remain disabled until they issue written permission for operators to bring them back into service. The analyst added that the process to restore the machines requires Light & Wonder to provide detailed accounts of each incident and obliges host venues to install “adequate surveillance.”
In a separate court development, a judge blocked the regulator’s disable order five days after the shutdown. The ruling allowed Light & Wonder to begin reactivating its charitable gaming machines. In a statement on the reinstated activity, the company said, “Light & Wonder is re-activating all charitable gaming devices in coordination with our charitable customers. Enhanced security features have been installed to detect and deter the illegal activity, which temporarily impacted less than 1% of all Grover machines deployed in Kentucky. Grover’s quality games are critical in supporting the fundraising initiatives of our charitable partners. We will proudly continue to support the important work of Kentucky’s charities.”
The restraining order enabling the reactivation took effect Tuesday afternoon and will remain until the court rules on the broader complaint. Both sides are scheduled to appear on December 8 to set the briefing and hearing timeline.
Market Share and Revenue Exposure Weighed by Analyst
Grover holds significant ground in Kentucky’s charitable market. Erman assessed its presence as nearly half the sector and estimated that the subsidiary contributes about eight percent of Light & Wonder’s total revenue. He said Grover’s installed base in Kentucky may approach 30 percent of all machines the company has in operation nationwide.
Even so, the overall impact of the shutdown is difficult to measure without knowing how long regulators may pause normal activity. Erman believed the revenue effect would amount to only a few percentage points. He also expressed doubt that nonprofits could consistently meet requirements that demand a chairman be physically on-site whenever the machines run, noting, “Charity economics already remain challenged (and are typically reliant on charitable gaming for profitability) and we are skeptical on the ability for this to be implemented.”
Charitable gaming groups emphasized their reliance on Grover’s devices. Shirley’s Way, which has operated since 2014, said almost all of its funding stems from charitable gaming. The group reported that it has distributed nearly $12.5 million over the years for cancer support, children’s initiatives, and other community causes, including close to $6 million in 2025 alone.
Analyst Maintains Confidence in Long-Term Outlook
Erman anticipated that Grover’s strong position within Kentucky would help expedite a resolution, limiting long-term consequences for Light & Wonder. He expected minor pressure on year-end 2025 cash flow but foresaw little risk to 2026 projections. Jefferies maintained its view, saying it would “make no changes to our forecast given lack of clarity on timeline for ban and full impact at this stage. Any transitory impact with clear resolution would not be a deterrent from our investment thesis,” calling for a 20 percent earnings-per-share return despite ongoing litigation matters.
If regulatory fallout remains contained, Erman concluded, “We remain positive on the opportunity for Grover to participate in new state openings and take existing state market share over the medium term.” He reaffirmed a Buy rating for Light & Wonder’s shares, which trade on the Australian Securities Exchange.
Source:
Light & Wonder faces minimal risk from Kentucky shutdown, analyst says, cdcgaming.com, November 30, 2025
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