Sweepstakes Provider Accuses Former B2B Texas Distributors of Copying Game Math

Minneapolis-based sweepstakes software provider Technology Holdings Corporation and three affiliated software companies have sued their former exclusive Texas distributors, alleging they stole trade secrets. The lawsuit was filed on October 20 in the Western District of Texas. The defendants include SFS IT Services, Semper Fido Sweepstakes, Morris Joseph, and Cody Rogers, vice president of SFS.

The plaintiffs are companies that license sweepstakes software and provide the terminals that run it. The defendants offered games to businesses in Texas under the license. The license was based on an exclusive arrangement dating back to 2018. The defendants said in January that they would not renew it. After the license ended on April 28, the defendants allegedly replaced the StealthX software with their own Phantom platform at midnight around May 24.

The plaintiffs claim that 23 Phantom games used the reel strips, meaning the symbol sequences that determine payout rates, of 15 of their own games. They seek the destruction of Phantom, damages, and an order blocking continued use.

A senior software engineer at the plaintiff company states that he identified the reel stop positions and symbol codes for the Country Lights game in Phantom. When he applied those values to the reel strips of the StealthX version, all 15 symbols matched. According to the complaint, the same test was repeated four more times, and matching reel structures were then found across the 23 Phantom games. The complaint states that there is no way this could be coincidental.

The plaintiffs also allege, on information and belief, that under the license the defendants had access to a test lab where they could preview new games, and that they used this lab to decode StealthX code. The lawsuit has not yet been evaluated by the court.