Key Takeaways
- Manhattan federal jury determined Papaya Gaming violated false advertising laws, awarding Skillz $420 million in compensatory damages
- Jury determined Skillz qualifies for an additional $652 million disgorgement payment, pending judge’s final decision in June
- SKLZ stock skyrocketed as much as 443% to $20 during Thursday’s session, finishing the day up 238% at $12.45
- Lawsuit focused on Papaya’s alleged use of automated bots disguised as real players and false claims about $4.7 billion in user payouts
- Following Thursday’s dramatic rally, SKLZ shares retreated 25% during Friday’s pre-market session
Skillz emerged victorious from a high-stakes courtroom battle against a competitor. On Thursday, a federal jury in Manhattan determined that Papaya Gaming Ltd. violated false advertising regulations, mandating a $420 million payment to the mobile gaming company.
The decision followed a week of testimony at the US District Court for the Southern District of New York. Eight jurors spent slightly more than two days deliberating before announcing their verdict. While originally scheduled for two weeks, proceedings concluded ahead of schedule after final arguments wrapped on April 20.
SKLZ shares experienced a meteoric rise following the announcement, soaring as high as 443% to reach $20 intraday Thursday before closing at $12.45—a gain of 238.32%, based on data from Benzinga Pro.
Beyond the $420 million damages judgment, jurors determined that Skillz qualifies for $652 million through disgorgement. Judge Denise Cote will make a final determination on this figure in early June.
The Heart of the Legal Dispute
Skillz brought allegations against Papaya Gaming, claiming the company misled players by deploying automated bots in specific games and competitions without proper disclosure. The complaint further asserted that while Papaya promoted $6.7 billion in total player winnings, approximately $4.7 billion of that sum actually went to bot-controlled accounts rather than genuine human competitors.
During final arguments, Papaya mounted a defense. The company contended no proof existed showing it profited from the contested portion of funds, emphasizing its complete 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.”
Stock Retreats Following Dramatic Thursday Surge
Rapid gains often invite equally swift corrections. Following Thursday’s extraordinary price movement, SKLZ declined 25.14% to $9.20 during Friday’s pre-market hours.
Such volatility following massive single-session rallies is typical behavior for smaller capitalization equities.
Skillz maintains a market capitalization of $194.23 million. The stock’s 52-week peak stands at $20—achieved during Thursday’s intraday surge—while its annual floor is $2.23. Current trading levels position the stock approximately 57.51% above that yearly bottom.
The stock’s Relative Strength Index registers at 91.38, indicating significantly overbought conditions. Across the trailing 12-month period, shares have appreciated 159.38%.
According to Benzinga’s Edge Stock Rankings, SKLZ demonstrates favorable price momentum across multiple timeframes.
Judge Cote’s ruling regarding the $652 million disgorgement determination is anticipated in early June.
