Key Takeaways
- Manhattan federal jury determined Papaya Gaming engaged in deceptive advertising practices and awarded Skillz $420 million in compensatory damages
- Jury additionally determined Skillz qualifies for $652 million in disgorgement funds, pending judicial approval expected in early June
- SKLZ shares skyrocketed as much as 443% to reach $20 during Thursday trading before settling at $12.45, up 238%
- Legal dispute focused on Papaya’s alleged deployment of bots posing as human competitors and false claims regarding $4.7 billion of its reported $6.7 billion in player winnings
- Following Thursday’s dramatic surge, SKLZ declined 25% during Friday’s pre-market session
Skillz emerged victorious from a high-stakes courtroom battle. On Thursday, a Manhattan federal jury determined that Papaya Gaming Ltd. violated false advertising regulations, mandating the company compensate the mobile gaming platform $420 million in damages.
The decision followed a week of proceedings 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 span two weeks, the trial concluded ahead of schedule following closing statements on April 20.
SKLZ shares soared on the announcement, climbing as high as 443% to hit $20 intraday Thursday before closing up 238.32% at $12.45, data from Benzinga Pro indicates.
Beyond the $420 million damage award, jurors determined that Skillz should receive $652 million in disgorgement. Judge Denise Cote will deliver her decision regarding this additional sum in early June.
Understanding the Legal Battle
Skillz alleged that Papaya Gaming misled its user base by deploying automated bots in select competitions and tournaments without proper disclosure. The company further contended that while Papaya promoted having distributed $6.7 billion in prizes to winners, approximately $4.7 billion of those funds actually went to bot-controlled accounts rather than genuine human players.
During final arguments, Papaya mounted its defense. The company maintained no evidence existed proving it profited from the disputed portion of winnings, emphasizing its aggregate 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 Decline Following Thursday’s Surge
Rapid ascents often lead to quick reversals. Following Thursday’s remarkable rally, SKLZ tumbled 25.14% to $9.20 during Friday’s pre-market hours.
Such retracements following dramatic single-session gains are typical 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 rally — while its 52-week bottom registers at $2.23. Current pricing reflects approximately 57.51% appreciation from that yearly low.
The stock’s Relative Strength Index measures 91.38, indicating severely overbought conditions. Throughout the past year, SKLZ has advanced 159.38%.
Benzinga’s Edge Stock Rankings indicate SKLZ demonstrates bullish price momentum across multiple timeframes.
Judge Cote’s ruling on the $652 million disgorgement request is anticipated in early June.
