Shares of Skillz Inc. experienced a dramatic surge on Thursday following a landmark legal victory in Manhattan federal court. A jury found Papaya Gaming Ltd. liable for false advertising and awarded Skillz $420 million in damages. The panel also determined that Skillz may recover an additional $652 million in disgorgement, representing profits Papaya might be forced to surrender. U.S. District Judge Denise Cote is expected to rule on that additional recovery in early June.
Market Reaction
Skillz stock skyrocketed approximately 187% to $10.55 as of 3:38 p.m. EDT, after touching an intraday high of $19.14 earlier in the session. The verdict marks a pivotal moment for the mobile gaming company, which has been battling competitors in the cash-competition space.
Damages Context
The $420 million damages award is nearly four times Skillz's projected 2025 revenue of $104.5 million, according to the company's own financial reports. This significant sum underscores the potential impact of the ruling on Skillz's financial outlook. The company reported $104.5 million in revenue for 2025, a net loss of $70.4 million, and $194.5 million in cash on hand as of March 31.
Legal Background
Skillz filed its lawsuit against Papaya in 2024, accusing the competitor of promoting its games as 'fair' and 'skill-based' while secretly deploying bots—automated players—in real-money tournaments. During the trial, Skillz attorney Lazar Raynal argued that Papaya claimed $6.7 billion in winnings, but $4.7 billion of that was funneled to bots rather than real players. The jury deliberated for just over two days before reaching its verdict.
Industry Implications
This case is part of a broader trend of legal disputes in the mobile gaming sector. Last year, Skillz and AviaGames reached a settlement after a jury awarded Skillz $42.9 million in a patent dispute. The repeated courtroom battles highlight the intense competition and regulatory scrutiny in the cash-competition gaming market.
What's Next
The verdict does not guarantee immediate payment. Judge Cote must still decide whether to grant the additional $652 million in disgorgement. Papaya argued during closing statements that there was no evidence it made profits from the disputed winnings and claimed its total revenue did not exceed $1 billion. A decision is expected in early June, which could either confirm the $420 million award or significantly increase it.
Skillz CEO Andrew Paradise welcomed the decision, emphasizing the company's commitment to fair competition and transparency for players and developers. CFO Gaetano Franceschi noted the company ended the year with $195 million in cash and cash equivalents, providing a solid financial foundation as Skillz continues to build on its recent momentum.