A Minneapolis software company has sued its former exclusive Texas distributors in federal court, alleging they copied its sweepstakes game math and reel strips into a competing product called Phantom.
Technology Holdings Corporation Inc. and three affiliates filed the complaint on October 20 in the U.S. District Court for the Western District of Texas. The defendants have not publicly responded, and the claims are allegations.
The plaintiffs are Technology Holdings Corporation, Midway Software Systems LLC, Mustang Software Systems LLC and 239 Software LLC. The defendants are SFS IT Services Inc., Semper Fido Sweepstakes LLC, Cody Rogers and Morris Joseph, according to the court docket.
The complaint says the defendants and a predecessor served as the plaintiffs’ exclusive Texas distributors for eight years under a license agreement first signed in April 2018. The defendants gave notice in January 2026 that they would not renew, and the agreement expired on April 28, according to the filing.
The plaintiffs allege that on or about May 24, the defendants replaced StealthX software with Phantom on terminals in the field. They describe the equipment as Sweepstakes Revealer Terminals used by businesses and charities in promotions where customers reveal sweepstakes entries tied to purchases or donations, or request free entries. The terminals are retail equipment, not online sweepstakes casinos.
The complaint says a senior engineer for the plaintiffs examined a game called Country Lights. It alleges he identified reel stop positions and symbol codes in Phantom, applied them to the StealthX reel strips, and found that all 15 visible symbols matched. The filing says he repeated the test four more times with the same result.
The plaintiffs allege at least 23 Phantom games use reel strips identical to those in 15 of their StealthX games. They also allege the defendants began planning the switch as early as November 2025, when customers were asked to sign new contracts that dropped references to “SFS Sweepstakes Software.”
The plaintiffs argue the defendants could not have launched replacement software so quickly without using their trade secrets. The complaint also alleges Phantom runs in more than 100 locations. Those figures come from the plaintiffs’ filing and have not been verified by a court.
The complaint brings trade secret misappropriation claims against all four defendants under the federal Defend Trade Secrets Act, 18 U.S.C. § 1836, and the Texas Uniform Trade Secrets Act, found in Chapter 134A of the Texas Civil Practice and Remedies Code. It adds a breach of contract claim against the two companies, SFS IT Services and Semper Fido Sweepstakes.
The plaintiffs seek preliminary and permanent injunctions, destruction of the Phantom software and any copies of their own software, actual and statutory damages, an accounting of profits, and attorneys’ fees. They allege the misappropriation was willful and malicious and have demanded a jury.
Summonses were issued October 26, so the defendants’ first response is still pending. Their response will show whether they dispute that the reel strips are trade secrets, argue Phantom was developed independently, or raise defenses under the license agreement.
The court has not ruled on any request for an injunction. Until it does, there is no finding on who owns the math behind the games or whether any copying occurred.
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