A New York jury has ruled in favor of Skillz in its dispute with Papaya Gaming, awarding $420 million in damages. Jurors also proposed potential disgorgement figures of $719 million and $652 million, which Judge Denise Cote will review before issuing a final decision later this summer.
Papaya can still challenge the outcome during post-trial proceedings, including seeking a mistrial or reduced judgment. If the court sets a higher disgorgement amount, Skillz will be able to choose between that and the damages award, but not both.
Papaya responded to the verdict, stating:
While Papaya respects the jury’s decision, we are disappointed with the outcome. We look forward to court review of the verdict. Papaya will continue to lead with integrity and transparency while remaining focused on our mission to deliver joy through exciting skilled‑based fair competition.
This case is all about the distinction between different types of skill-based games and how both companies avoid being classified as gambling. Most regulators have started looking into this distinction in different states, but the regulators have only begun actively looking into whether or not it is considered gambling (particularly for App-Based and arcade-style game businesses).
When Papaya allegedly misled people that they were Matchmaking Fairly and Definitely had Bots for Matchmaking, Skillz claimed that its company suffered a loss of Business (particularly their share prices dropped) due to the fact that Skillz and Papaya were not operating in the same way.
Following the verdict, Skillz shares surged significantly. The company welcomed the outcome, stating:
Skillz​ ​is​ ​pleased​ ​with​ ​the​ ​jury’s​ ​verdict​ ​and​ ​the​ ​actual​ ​damages​ ​award​ ​of​ ​$420​ ​million​ ​in​ ​our​ ​litigation​ ​against​ ​Papaya​ ​Gaming.​ ​Skillz​ ​proved​ ​at​ ​trial​ ​that​ ​Papaya​ ​used​ ​bots​ ​in​ ​its​ ​games,​ ​which​ ​is​ ​the​ ​issue​ ​at​ ​the​ ​core​ ​of​ ​Skillz’s​ ​claims​ ​around​ ​false​ ​advertising,​ ​deceptive​ ​trade​ ​practices​ ​and​ ​transparency​ ​in​ ​the​ ​skill-based​ ​gaming​ ​industry.​ ​Papaya​ ​conducted​ ​a​ ​multi-year​ ​campaign​ ​of​ ​fraud​ ​and​ ​false​ ​advertising​ ​that​ ​materially​ ​damaged​ ​Skillz​ ​and​ ​the​ ​skill-based​ ​gaming​ ​industry.
The decision made by the courts to declare that Skillz’s business was not a Gambling Business caused the opening of a major Market Rally for SkillZ shares from approximately ($3.50) to approximately ($13) before returning back down again to their current price. This market swing caused Skillz to have a total gain in value of approximately ($420,023,235).
