A jury has awarded Skillz Inc., a gaming company based in Las Vegas, a staggering $420 million in damages from Papaya Gaming, after determining that false advertising practices were involved.
The verdict, announced on April 23, represents the largest award for damages in U.S. history under the Lanham Act, which regulates trademark infringement and false advertising matters.
This case was filed in March 2024 in the U.S. District Court for the Southern District of New York, highlighting allegations that Papaya misrepresented its service, claiming users were playing against real opponents while they were often matched with bots. The court also uncovered that Papaya was involved in fraudulent activities amounting to $4.7 billion.
“I felt a huge sense of relief since I’ve been advocating for this,” stated Skillz CEO Andrew Paradise, in remarks reported by the Las Vegas Review-Journal. “To be honest, many thought I was being unrealistic.”
Established in 2012, Skillz provides a platform that enables users to compete in skill-based games for real money, with entry fees generally below $3. Founded in 2016 in Israel, Papaya Gaming offers comparable titles such as Solitaire Cash, Bingo Cash, and Bubble Cash, emphasizing global player-versus-player competition.
Skillz, which possesses over 80 related patents, experienced rapid growth, becoming the fastest-growing company in the U.S. and ranking No. 1 on the Inc. 5000 in 2017. However, competition from companies like Papaya has significantly impacted its market position.
“In the first week, they were earning five times what we were making,” Paradise noted. “It was essentially a replica of our product, and we couldn’t comprehend it.”
During court testimonies, Skillz executives revealed they uncovered the alleged usage of bots by competitors at the Game Developers Conference in 2023, held in San Francisco. Chief Strategy Officer Casey Chafkin noted significant inconsistencies in competing platforms’ operations.
“What they’re doing is presenting the illusion of real competition when, in fact, players are gambling against the house,” remarked Paradise. “This is worse than gambling; it’s rigged gambling.”
This recent Papaya ruling follows another legal success for Skillz earlier this year, when the company won a $43 million judgment against AviaGames for patent infringement.
Besides the $420 million jury award, the court may order Papaya to pay additional damages, including a potential disgorgement of profits up to $719 million or penalties based on cost savings amounting to $652 million. These penalties are alternatives to the jury award, not cumulative, and may be increased at the court’s discretion.
“Papaya’s entire business model is predicated on deception, exploiting users and manipulating them,” expressed Paradise. “It’s harming the industry that I helped create.”