A jury has awarded Skillz Inc., a gaming company based in Las Vegas, a staggering $420 million in damages against Papaya Gaming, concluding that Papaya engaged in deceptive advertising practices.
This verdict, delivered on April 23, represents the largest award in U.S. history under the Lanham Act, which addresses trademark infringement and false advertising claims.
The case was initiated in March 2024 in the United States District Court for the Southern District of New York, focusing on allegations that Papaya misled users by suggesting they were competing against real players, while in reality, they were often matched with bots. The court also found that Papaya was involved in fraudulent activities amounting to $4.7 billion.
Skillz CEO and founder Andrew Paradise expressed his relief, stating, “I was relieved because I’ve been telling people this and crusading for this. To be quite frank, people thought it was kind of crazy,” as reported by the Las Vegas Review-Journal.
Founded in 2012, Skillz provides a platform where users can compete in skill-based games for real money, typically with entry fees below $3. In contrast, Papaya Gaming, established in 2016 in Israel, offers similar games such as Solitaire Cash, Bingo Cash, and Bubble Cash, promoting global player-versus-player competition.
Skillz, which holds over 80 patents related to its platform, was once recognized as the fastest-growing company in the U.S., topping the Inc. 5000 list in 2017. However, the rise of competitors like Papaya significantly impacted its market standing.
During the Game Developers Conference in 2023, held in San Francisco, Skillz executives discovered the alleged use of bots by competitors. Chief Strategy Officer Casey Chafkin revealed inconsistencies in the operations of rival platforms.
“What they’re doing is they’re telling you that you’re playing real people, when you’re actually playing the house,” Paradise explained. “It’s worse than gambling. It’s rigged gambling.”
The Papaya case follows another legal success 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 require Papaya to pay further damages, which could include up to $719 million in profits-based disgorgement or $652 million in penalties based on cost savings. These amounts are alternatives to the jury award, not cumulative, and may be increased at the court's discretion.
“The concept that Papaya built, it’s built on fraud, it’s built on stealing from people and tricking them,” Paradise stated. “It’s destroying the industry I started.”