Key Highlights
- Manhattan federal jury determined Papaya Gaming violated false advertising laws, awarding Skillz $420 million in compensation
- Jury additionally determined Skillz deserves $652 million in disgorgement, pending judicial approval expected in early June
- SKLZ shares skyrocketed as much as 443% to reach $20 during Thursday trading, ultimately finishing the day up 238% at $12.45
- The lawsuit focused on allegations that Papaya utilized automated bots rather than real players and falsely claimed $4.7 billion of its reported $6.7 billion in player winnings
- Following Thursday’s dramatic rally, SKLZ shares fell 25% during Friday’s pre-market session
Skillz secured a major legal triumph against a competitor. On Thursday, a federal jury in Manhattan determined that Papaya Gaming Ltd. violated false advertising regulations, mandating the company compensate the mobile gaming platform with $420 million.
The decision followed a trial spanning one week 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 conclusion. Originally scheduled for two weeks, the proceedings concluded ahead of schedule following final arguments presented on April 20.
SKLZ shares experienced an extraordinary surge following the announcement, climbing as high as 443% to reach $20 intraday Thursday before concluding the session with gains of 238.32% at $12.45, based on data from Benzinga Pro.
Beyond the $420 million damage award, jurors concluded that Skillz deserves $652 million through disgorgement. Judge Denise Cote will make a determination regarding this additional amount in early June.
Understanding the Legal Dispute
Skillz alleged that Papaya Gaming misled its user base by deploying automated bots within specific games and competitions without proper disclosure. The company further maintained that Papaya promoted having distributed $6.7 billion in prize money — while $4.7 billion of those winnings actually went to bot-controlled accounts rather than legitimate human competitors.
Throughout final arguments, Papaya mounted its defense. The organization argued no evidence demonstrated it profited from the disputed portion of funds, emphasizing its actual revenue totaled less than $1 billion.
The jury ultimately ruled in Skillz’s favor.
“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 Reversal Following Thursday’s Surge
Rapid gains often lead to quick corrections. Following Thursday’s remarkable price action, SKLZ declined 25.14% to $9.20 during Friday’s pre-market hours.
Such volatility following dramatic single-session movements is typical for small-capitalization equities.
Skillz maintains a market capitalization of $194.23 million. The stock’s 52-week peak stands at $20 — reached during Thursday’s intraday surge — while its 52-week floor sits at $2.23. Current pricing represents approximately 57.51% above that yearly low.
The company’s Relative Strength Index measures 91.38, indicating significantly overbought conditions. Throughout the trailing twelve months, shares have appreciated 159.38%.
Benzinga’s Edge Stock Rankings indicate SKLZ demonstrates positive momentum patterns across multiple timeframes.
Judge Cote’s ruling on the $652 million disgorgement request is anticipated in early June.
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