Skillz wins $420 million verdict against Papaya Gaming for false advertising

A jury has awarded Las Vegas–based gaming company Skillz Inc. $420 million in damages against Papaya Gaming, concluding that Papaya engaged in false advertising practices.

The verdict, delivered April 23, marks the largest award in U.S. history under the Lanham Act, which governs trademark infringement and false advertising claims.

The case, filed in March 2024 in the United States District Court for the Southern District of New York, centered on allegations that Papaya misled users by claiming they were competing against real players when, in fact, they were often matched against bots. Court findings also concluded that Papaya engaged in $4.7 billion worth of fraudulent activity.

“I was relieved because I’ve been telling people this and crusading for this,” said Skillz CEO and founder Andrew Paradise, as reported by the Las Vegas Review-Journal. “To be quite frank, people thought it was kind of crazy.”

Founded in 2012, Skillz operates a platform that allows users to compete in skill-based games for real money, typically with entry fees under $3. Papaya Gaming, established in 2016 in Israel, offers similar titles such as Solitaire Cash, Bingo Cash, and Bubble Cash, promoting global player-versus-player competition.

Skillz, which holds more than 80 patents related to its platform, was once the fastest-growing company in the U.S., ranking No. 1 on the Inc. 5000 in 2017. However, the emergence of competitors like Papaya significantly disrupted its market position.

“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.”

According to court testimony, Skillz executives discovered the alleged use of bots by competitors during the Game Developers Conference in 2023, held in San Francisco. The revelation came from Chief Strategy Officer Casey Chafkin, who identified discrepancies in how rival platforms operated.

“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 Papaya case follows another legal victory for Skillz earlier in 2024, when it secured a $43 million judgment against AviaGames for patent infringement.

In addition to the $420 million jury award, the court may still order Papaya to pay additional damages, including up to $719 million in profits-based disgorgement or $652 million in cost-savings-based penalties. These figures are considered alternatives to the jury award, not additive, and could be increased further under court discretion.

“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.”