On July 28, U.S. District Judge Denise Cote of the Southern District of New York entered a judgment against Papaya Gaming Ltd. in Skillz Platform Inc. v. Papaya Gaming Ltd., No. 1:24-cv-01646. The ruling followed an April jury verdict of $420 million in damages; the court separately awarded $719 million in disgorgement—an alternative remedy the plaintiff may elect in lieu of damages—along with $10.1 million in attorneys’ fees. The lawsuit stemmed from Papaya’s alleged misrepresentation that its mobile cash tournament games rewarded player skill, when the outcomes were instead shaped by undisclosed bots designed to replicate a house advantage.
Papaya developed various mobile games, such as Solitaire Cash and Bubble Cash, in which players competed in cash tournaments it characterized as games of individual skill. Firy Inc. (formerly Skillz Inc.), a direct competitor, sued in 2024 alleging that Papaya deployed undisclosed bots to manipulate player outcomes, prevent users from performing too well, and drive continued paid tournament participation. Instead of disclosing that bots were being used to manufacture player liquidity and motivate losing players to re-enroll, Papaya advertised its platform as one where human skill fairly determined results.
Judge Cote rejected Papaya’s post-trial motions, finding sufficient evidence to conclude that Papaya made false statements causing actual consumer confusion under the Lanham Act and New York’s General Business Law. The court also found that Papaya acted willfully and in bad faith, including by obstructing discovery and delaying production of critical materials, which supported an exceptional-case finding and the resulting attorneys’ fees award.
Link to The Dual Regulatory Exposure The Dual Regulatory Exposure
Papaya’s mobile games seemed to present a familiar framework: skill-based competitions for prizes, which occupy a distinct legal category from games of chance. In practice, however, the product Papaya delivered was fundamentally different from what it advertised. By introducing undisclosed bots to engineer a de facto house advantage, Papaya effectively converted what it represented as a skill competition into something far more opaque.
Link to Why This Matters Why This Matters
The judgment against Papaya sends a clear signal to gaming operators that the manner in which games are represented to players, not merely how they are technically structured, carries substantial legal weight. Operators developing or operating skill-based platforms must take note of the following:
- Undisclosed mechanisms that influence outcomes or payout expectations will be assessed not only under gaming law, but also under federal and state consumer protection frameworks.
- The use of bots or similar tools to simulate competition, even if operationally useful, creates significant false advertising and fraud exposure if not disclosed.
- Willful misconduct and litigation obstruction can convert a damages case into an exceptional-case fee-shifting scenario, dramatically increasing total exposure.
As operators continue searching for ways to engineer competitive advantages in skill-based environments, this case illustrates that undisclosed mechanisms designed to influence outcomes will face scrutiny well beyond the traditional gaming law context. A well-designed compliance program in this space must account for both dimensions.