A Manhattan jury ordered Papaya Gaming to pay $420 million after finding it misled players with bots
A Manhattan federal jury handed mobile gaming company Skillz Platform Inc. a significant legal win Thursday, finding rival Papaya Gaming Ltd. liable for false advertising and ordering it to pay $420 million in damages. The verdict sent Skillz shares soaring more than 200% on the New York Stock Exchange, briefly touching a gain of 443% before settling around $12 in mid-afternoon trading.
The jury, seated at the U.S. District Court for the Southern District of New York, deliberated for just over two days before reaching its decision. The trial itself, originally expected to run two weeks, concluded ahead of schedule after closing arguments wrapped on April 20.
What Skillz accused Papaya of doing
The lawsuit centered on claims that Papaya Gaming deceived its own players by quietly substituting bots for human competitors in certain games and tournaments without disclosing the practice. Skillz further argued that Papaya falsely advertised having paid users $6.7 billion in winnings across its portfolio of online games, including solitaire-style titles, when approximately $4.7 billion of that figure went to games in which bots, not real players, won the money.
Papaya pushed back during closing arguments, telling the jury there was no evidence the company earned a single dollar from the portion of winnings in dispute. The company also noted that its total revenue across all operations came in below $1 billion, a figure it positioned as incompatible with the scale of damages Skillz sought.
A second financial decision still ahead for Skillz
Beyond the $420 million damages award, the jury separately determined that Skillz is entitled to $652 million in disgorgement, a legal remedy designed to strip a defendant of profits gained through wrongful conduct. Judge Denise Cote indicated she plans to issue a ruling on that portion of the case in early June, meaning the total financial exposure for Papaya Gaming could climb significantly higher depending on her decision.
Skillz described the outcome as a vindication of its core argument that the mobile gaming industry requires transparency between platforms and their players. The company framed the verdict as a broader statement about fair competition in a sector where the line between legitimate tournaments and algorithmically manipulated outcomes has not always been clearly drawn.
The stock’s dramatic single-day move reflects how unexpected a verdict of this scale was for a company that had seen its share price depressed for an extended period. Whether the financial awards are ultimately collected, particularly given Papaya’s contention about the limits of its own revenue, will likely be the next question investors and legal observers track as the case moves toward its June resolution.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author and publication are not registered investment advisors and do not provide personalized investment recommendations.