Las Vegas skill-based gaming company Skillz was awarded a $420 million jury verdict against Papaya Gaming for false advertising.
The April 23 verdict is the largest Lanham Act, which allows companies to pursue civil cases for trade market infringement, award in U.S. history.
The lawsuit, which was filed in March 2024 in the United States District Court for the Southern District of New York, found Papaya was matching humans with bots, rather than other users on its platforms, despite claims on its website. Additionally, it was found Papaya had 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 quite frank, people thought it was kind of crazy.”
Founded in 2012, Skillz is a skill-based gaming company that allows users to wager real money and play against other players on the platform for prizes. The typical entry is under $3, the company said.
Papaya is an Israeli skill-based company founded in 2016, offering games like Solitaire Cash, Bingo Cash and Bubble Cash. The company’s website advertises people can “play daily tournaments and take on players all over the world,” similar to that of Skillz.
Papaya didn’t immediately respond to a request for comment.
Skillz is a pioneering platform in the digital skill-based industry, holding over 80 patents for the creation of the technology. In 2017, Skillz ranked No. 1 on the Inc 5000 list for being the fastest growing business in the country.
Then other skill-based startups, like Papaya, started to crop up: “they were kicking out butts,” said Paradise. As a result, the price of advertising was raised significantly, boxing Skillz out of the market, making them unable to make money off advertising, he said.
“They were making five times as much money as us in the first seven days,” said Paradise. “It was literally a clone of our product … we couldn’t figure it out.”
That was until the 2023 Game Developers Conference which is held annually in San Francisco. There Casey Chafkin, Skillz chief strategy officer, found out their competitors were putting its players up against bots, not other humans, according to court transcripts.
“So, what they’re doing is they’re telling you that you’re playing real people, when you’re actually playing the house,” said Paradise. “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 the 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 disgorgement figures of $719 million in profits-based and $652 million in cost-savings-based. These figures are alternatives to the original judgement, not additive, and could be potentially doubled or tripled, according to Skillz.
“The concept that Papaya built, it’s built on fraud, it’s built on stealing from people and tricking them,” said Paradise. “It’s destroying the industry I started.”
Contact Emerson Drewes at edrewes@reviewjournal.com. Follow @Emerson Drewes on X.
