Papaya Ordered to Pay $719 Million Disgorgement to Skillz in Solitaire Botting Case
A judge has awarded Skillz a truckload of cash from its rival, Papaya.
The judge in Skillz v. Papaya has returned her ruling on the final penalty to be paid, opting for a $719 million disgorgement, the highest figure among those the jury had submitted for her consideration.
In April, a New York jury ruled in favor of Skillz—Papaya’s primary competitor in the online skill-gaming space. Skillz had discovered that Papaya was pitting human users against “bots” and accused it of unfair competition through falsely advertising its games as human-vs.-human contests of skill.
The sum chosen by Judge Denise Cote reflects an estimate of Papaya’s unjust enrichment through its false advertising. It is in lieu of, not in addition to, the $420 million in damages originally awarded by the jury. That lower sum was based on an estimate of what Skillz’s valuation might have been if not for the unfair competition.
A third sum had also been on the table for Cote’s consideration: $652 million, based on an estimate of the amount Papaya saved on customer acquisition costs during the period it was using bots. Papaya discontinued the practice in December 2023.
Papaya expressed disappointment in the ruling and said it will pursue all available options, including appeal. However, the ruling mentions that most of Papaya’s arguments during the trial related to the size of an appropriate judgment, not the merits of the accusations. There is ample factual information that Papaya did use bots and told users that it was not doing so.
The company’s short statement reads, in part:
“Papaya remains committed to continuing to lead and grow the mobile gaming industry with integrity and transparency, delivering exciting skill-based fair competition to our players.”
Update (08/03): Papaya Implements Legal Framework for Operations Pending Appeal
Gaming America can exclusively reveal that Papaya has implemented a strategic legal framework to ensure continuity of its operations during the planned appeals process. It has, meanwhile, applied for Chapter 15 bankruptcy in the U.S., admitting that it cannot pay the full amount of the disgorgement.
The Tel Aviv-Jaffa District Court in Israel will work in tandem with the U.S. Court to oversee a scheduled series of payments by Papaya to cover its legal liability in this case and related cases.
The funds will be placed in a court-supervised fund and will not be paid out to Skillz or other plaintiffs until the appeals process concludes. Papaya says the arrangement will allow it to continue business as usual.
“Given the company’s financial success, this action in accordance with Israel and U.S. laws allows us to continue operating as usual until the appeal in the United States is resolved,” says Papaya’s official statement. “This is a proactive, responsible, and strategic step to preserve the Company’s operations and the rights of all parties during the appeal process, which may last several years. Papaya’s operations continue as usual, and the Company is fully meeting its ongoing obligations to its employees, players, vendors, and service providers, without any change.”
Papaya’s Botting History by the Numbers
Judge Cote’s ruling doesn’t mince words about Papaya’s behavior during the period in question. She writes:
“Papaya’s founders decided to enter the RMSB market in 2019 by deceiving the public and others about the nature of its product. Instead of running tournaments in which the players who had paid entry fees competed against each other, Papaya decided to solve the problem of building liquidity by running tournaments in which multiple participants were not other human players but were instead ‘bots.’ Papaya’s bots were essentially scores designated by Papaya’s algorithms; they were not artificially intelligent players. In these tournaments, a player’s score was compared to the scores Papaya assigned to its bots.”
What we already knew from earlier court documents was that there were two types of bots. Some had randomized scores and were used just to fill tournaments. Others, known as “tailored bots,” were given a score designed to hand a player a guaranteed win, to keep a losing player around, or a loss, to reclaim money from a winning player.
However, the ruling also includes details about the scope of the botting:
- Roughly one-quarter of the tournaments Papaya ran between 2021 and 2024 included tailored bots.
- By the time Papaya discontinued the practice, fake user profiles for bots outnumbered genuine users on its platform, at 13 million to 11 million.
- 6.1 million human users were at least once given a guaranteed loss by a tailored bot, while 7.3 million were given a guaranteed win.
- At the time of a Papaya advertising campaign claiming $6.7 billion in prizes had been paid out, only $2 billion had. The remainder had been “won” by bots and stayed with the company.
Skillz Looks to Rebuild After Some Tough Years
In its statement, Skillz focused on its own company valuation, which had been at an all-time low before the verdict and has only recovered slightly since.
“We founded this industry and built its biggest and best company on one value above all others: honor,” said Andrew Paradise, CEO and Founder of FIRY, as Skillz is now called. “When growth stalled, investors decided our moat was a story. It was not. In a winner-take-most market, Papaya could not beat us fairly, so it used bots to fake the competition we invented. This judgment sets the record straight. The moat was real.”
Skillz has been on the defending end of a number of other lawsuits over the years, including by its own investors. Its stock debuted at over $280 in 2021 at the height of investor enthusiasm around iGaming and adjacent products. At its lowest, early this year, it had lost over 99% of that value. Since then, shares have nearly quadrupled in price, yet remain south of $10 as of this writing.
Given what happened to share prices even for regulated iGaming companies like DraftKings and Flutter, the period around 2022 and 2023 likely would have been difficult regardless. Unjust competition from Papaya surely didn’t help, but the unregulated gambling-adjacent space is now both crowded and diminishing in size. Sweepstakes sites, skill gaming, and prediction markets are competing for slices of a pie that’s shrinking as states attempt to oust these products that sit just outside the legal definition of gambling.
Even with the rebound it has had, FIRY’s market capitalization is a mere $150 million. In principle, receiving a $719 million cash infusion from Papaya would multiply its value. The fact that share prices remain as low as they are suggests investor uncertainty over the appeals process, Papaya’s ability to pay, and FIRY’s ability to collect.
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