for early access to the latest igaming videos!
and get the latest igaming news first!
A New York jury sided with Skillz in its false advertising dispute against Papaya, recommending $420 million in damages. Jurors also outlined possible disgorgement figures of $719 million and $652 million, which Judge Denise Cote will weigh before issuing her final ruling later this summer.
Papaya still has room to challenge the outcome. During post‑trial proceedings, it can argue for a mistrial or push for a reduced judgment. If Judge Cote sets a disgorgement figure higher than the damages, Skillz would be able to choose between the two awards, but not collect both.
Papaya expressed its disappointment with the outcome in a statement to Gaming America. “While Papaya respects the jury’s decision, we are disappointed with the outcome. We look forward to court review of the verdict. Papaya will continue to lead with integrity and transparency while remaining focused on our mission to deliver joy through exciting skilled‑based [sic] fair competition.”
Both companies rely on the skill element of their games to avoid being classified as gambling. Still, regulators in several states are beginning to scrutinize this loophole, targeting app‑based formats as well as slot‑style and arcade‑like devices.
Skillz said it lost business due to Papaya’s bot
Skillz built its case around claims that Papaya misled players by presenting its games as “skill‑based” and “fair.”
The issue first surfaced when Skillz uncovered during discovery in a separate lawsuit against AviaGames that bots were being used to match human players. That case ended with an $80 million settlement, but Skillz later hired outside researchers to test whether Papaya was engaging in the same practice.
The findings sparked lawsuits from players as well, though Skillz’s own case focused less on the bots themselves and more on the damage caused by Papaya’s marketing. Skillz argued that it lost business because Papaya falsely promoted its games as fair competitions, even while some matches against non‑human opponents were set up with predetermined outcomes.
Papaya eventually admitted that bots had been part of its system until November 2023, but said the practice had stopped after that point. Unlike the AviaGames dispute, the clash between Papaya and Skillz went all the way through trial without a settlement.
Skillz shares quadrupled following news
The verdict gave Skillz a rare boost, even as the company continues to struggle financially. A representative told Gaming America:
“Skillz is pleased with the jury’s verdict and the actual damages award of $420 million in our litigation against Papaya Gaming. Skillz proved at trial that Papaya used bots in its games, which is the issue at the core of Skillz’s claims around false advertising, deceptive trade practices and transparency in the skill-based gaming industry. Papaya conducted a multi-year campaign of fraud and false advertising that materially damaged Skillz and the skill-based gaming industry.”
The announcement sent shares of Skillz flying. The stock jumped from about $3.50 to nearly $13 at its peak, a fourfold increase in a single day. By the next trading session, the excitement cooled, with the price sliding back 37% to just under $8. Even with that drop, the shares are still more than double what they were a week earlier.
For a company valued at only $60 million before the ruling, the $420 million award could be a lifeline. If Judge Denise Cote sets a higher disgorgement figure, Skillz would have the option to choose that instead. Still, investors remain cautious.
The company’s history of dramatic highs and lows, debuting near $200, spiking above $800 in 2021, then crashing to $2.23, has left the market wary.
Source: Gaming America
