Aristocrat Leisure Limited shares halted ahead of Federal Court decision

The Aristocrat Leisure Limited (ASX: ALL) share price has been one of the best performers on the market over the last 12 months, rising a massive 59%.

But its shares won’t be going anywhere today after the gaming technology company requested that they be placed in a trading halt.

Why are Aristocrat Leisure’s shares in a trading halt?

The company has requested the trading halt because at 12 noon today the Federal Court is due to deliver its judgement in relation to proceeding VID1274/2016.

This proceeding concerns the compliance of certain electronic machines with Federal legislation. The company’s Aristocrat Technologies Australia business is the second respondent to the proceeding.

Management believes a trading halt is necessary to prevent a disorderly or uninformed market in its shares while the Court delivers its decision. Furthermore, it will allow the company to consider the decision and provide any response to the market that may be necessary.

What is VID1274/2016?

According to court files, the issue relates to Aristocrat Leisure’s “Dolphin Treasure” electronic gaming machines that are available for play at Crown Resorts Ltd (ASX: CWN) In Southbank, Melbourne.

The applicant has alleged that the Dolphin Treasure machines are misleading and deceptive, and has claimed that they duped players about their chances of winning.

What now?

There are 38 Dolphin Treasure electronic gaming machines available at Crown casino, so it isn’t by any means a material part of the business. However, if the company is found to have misled gamers, there could be repercussions that extend beyond just these gaming machines and possibly throughout the entire industry.

This could make the shares of industry peer Ainsworth Game Technology Limited (ASX: AGI) somewhat volatile today.

But all being well, the company will be cleared of any wrongdoing today, allowing its shares to continue their upward trajectory and for management to refocus on its fast-growing digital business.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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