Skillz Wins $420M Fraud Verdict Against Papaya Gaming's Bots

A Manhattan federal jury has ruled in favor of Las Vegas-based mobile gaming company Skillz in its false advertising lawsuit against rival Papaya Gaming. The eight-person jury deliberated for just over two days before finding Papaya liable. The jury found Papaya had violated the Lanham Act and New York business statutes, awarding Skillz $420 million in damages. The jury also recommended disgorgement figures of $719 million and $652 million. Judge Denise Cote will issue a final ruling on disgorgement in early June.

Skillz's Case Against Papaya Gaming's Bot Fraud Explained

At the heart of the case was Papaya's use of automated bots in games marketed as human-only competitions. Skillz hired a third-party research company to test whether Papaya was matching players against bots. Papaya later admitted it had used bots until November 2023.

Skillz also alleged that Papaya advertised paying users $6.7 billion in winnings. Of that total, $4.7 billion went to games where bots won. Skillz argued it had lost business to Papaya because of these false representations. CEO Andrew Paradise described the dispute as a matter of trust. "Papaya conducted a multi-year campaign of fraud and false advertising that materially damaged Skillz and the skill-based gaming industry," the company said in a statement.

Skillz Stock Surges After Landmark $420M Fraud Verdict

Skillz shares surged more than 200% on the New York Stock Exchange following the verdict. Shares jumped as high as 443%, hitting $20, before settling around $11. Before the ruling, Skillz had a market capitalization of roughly $60 million. A $420 million award would represent a significant financial lifeline for the struggling company. Investor reaction remained volatile, reflecting uncertainty over how much money Skillz will ultimately recover.

A federal jury's $420 million fraud verdict against Papaya Gaming signals that misleading players with bots is not just an ethical violation but a legally actionable offense with massive financial consequences.

"We're pleased with the jury's verdict and appreciate the careful consideration of the facts," a Skillz spokesperson said. "We remain committed to fair competition and to providing a trusted, transparent experience for players and developers."

Papaya Plans Appeal as Verdict Sets Gaming Fraud Precedent

Papaya announced plans to appeal and may argue for a mistrial or reduced judgment in post-trial conferences. "While Papaya respects the jury's decision, we are disappointed with the outcome. We look forward to court review of the verdict," a Papaya spokesperson said.

During closing arguments, Papaya argued there was no evidence it earned a single dollar from the disputed portion of winnings. The case follows Skillz's earlier legal victory against AviaGames, which settled for $80 million after similar allegations of bot use. The verdict sets a notable precedent, showing that rival companies, not only players, can successfully claim harm when fairness assurances prove false.