Quick Summary
- Papaya Gaming was found liable for false advertising by a Manhattan federal jury, resulting in a $420 million damages award to Skillz
- Skillz may receive an additional $652 million in disgorgement, pending a judicial ruling expected in early June
- Shares of SKLZ jumped as much as 443% to $20 during Thursday’s trading session, ultimately closing up 238% at $12.45
- Papaya allegedly used automated bots rather than real players and falsely claimed $4.7 billion of its reported $6.7 billion in player winnings
- Following Thursday’s massive rally, SKLZ shares retreated 25% during Friday’s pre-market session
Skillz emerged victorious from a courtroom battle with a competitor, securing a substantial financial judgment. A federal jury in Manhattan delivered a Thursday ruling that Papaya Gaming Ltd. violated false advertising laws, mandating the company pay $420 million in damages to the mobile gaming platform.
The decision followed a week-long trial held at the US District Court for the Southern District of New York. Eight jurors spent slightly more than two days in deliberation before announcing their verdict. Although initially scheduled to run two weeks, the trial concluded ahead of schedule after closing arguments wrapped up on April 20.
SKLZ shares reacted dramatically to the announcement, soaring as high as 443% to reach $20 during Thursday’s trading hours before closing the session up 238.32% at $12.45, based on data from Benzinga Pro.
Beyond the $420 million damages award, jurors determined that Skillz qualifies for $652 million in disgorgement. Judge Denise Cote will deliver her decision on that figure in early June.
Details of the Legal Dispute
Skillz brought allegations against Papaya Gaming for misleading players through undisclosed bot usage in select games and tournaments. Skillz further contended that Papaya promoted $6.7 billion in total winnings — while $4.7 billion of that amount actually went to automated bots rather than human competitors.
During closing arguments, Papaya mounted a defense. The company argued that no evidence showed it profited from that disputed portion of winnings, emphasizing that its total revenue remained under $1 billion.
The jury ultimately ruled in favor of Skillz.
“We’re pleased with the jury’s verdict and appreciate the careful consideration of the facts,” Skillz said in a statement. “We remain committed to fair competition and to providing a trusted, transparent experience for players and developers.”
Sharp Decline Following Thursday’s Rally
Rapid gains can reverse just as quickly. Following Thursday’s explosive price movement, SKLZ fell 25.14% to $9.20 during Friday’s pre-market session.
Such reversals following dramatic single-day advances represent common behavior for small-cap securities.
Skillz maintains a market capitalization of $194.23 million. The stock’s 52-week high stands at $20 — reached during Thursday’s intraday surge — while its 52-week low rests at $2.23. Current pricing represents approximately 57.51% above that low point.
The Relative Strength Index for SKLZ registers at 91.38, indicating deeply overbought conditions. Throughout the past twelve months, the stock has climbed 159.38%.
Benzinga’s Edge Stock Rankings indicate SKLZ demonstrates positive price momentum across all measured timeframes.
Judge Cote will announce her ruling on the $652 million disgorgement request in early June.
