Las Vegas skill-based gaming company Skillz was awarded a $420 million jury verdict against Papaya Gaming for false advertising.
The April 23 ruling is the largest Lanham Act, which allows companies to pursue civil lawsuits for trade infringement, awarded in US history.
The suit, filed in March 2024 in the US District Court for the Southern District of New York, found that Papaya matched people with bots rather than other users on its platforms, despite claims on its website. In addition, Papaya was found to have committed $4.7 billion in fraud.
“I was relieved because I’ve been telling people this and crusading for this,” said Skillz CEO and founder Andrew Paradise. “To be honest, people thought it was pretty crazy.”
Founded in 2012, Skillz is a skill-based gaming company that allows users to bet real money and play against other players on the platform for prizes. The typical item is under $3, the company said.
Papaya is an Israeli skill-based company founded in 2016 that offers games such as Solitaire Cash, Bingo Cash and Bubble Cash. The company’s website advertises that people can “play daily tournaments and take on players worldwide,” similar to that of Skillz.
Papaya did not immediately respond to a request for comment.
Skillz is a pioneering platform in the digital skills-based industry, with over 80 patents for the creation of the technology. In 2017, Skillz was ranked #1 on the Inc 5000 list for being the fastest growing business in the country.
Then other skills-based startups, like Papaya, started popping up: “they kicked ass,” Paradise said. As a result, the price of advertising was raised significantly, boxing Skillz out of the market, leaving them unable to make money from advertising, he said.
“They made five times as much money as us in the first seven days,” Paradise said. “It was literally a clone of our product … we couldn’t figure it out.”
That was until the 2023 Game Developers Conference held annually in San Francisco. There, Casey Chafkin, Skillz’s chief strategy officer, learned that their competitors were pitting their players against bots, not other people, according to court transcripts.
“So, what they do is they tell you that you’re playing real people, when you’re actually playing the house,” Paradise said. “It’s worse than gambling. It’s rigged gambling.”
The first lawsuit Skillz filed was against AviaGames, where it won a $43 million judgment for willful infringement of its platform patent in February 2024. The lawsuit against Papaya for false advertising was next filed, saying it “stole the market” from Skillz and damaged the industry’s reputation, an industry paradise started.
The court could also order Papaya to pay Skillz figures of $719 million in profit-based and $652 million in cost savings. These numbers are alternative to the original assessment, not additive, and could potentially double or triple, according to Skillz.
“The concept that Papaya built, it’s built on deception, it’s built on stealing from people and deceiving them,” Paradise said. “It’s destroying the industry I started.”
Contact Emerson Drewes at edrewes@ theplayerlounge.com. Follow @Emerson Drewes on X.
