The Skillz lawsuit that put the mobile esports company in headlines is its false advertising case against Papaya Gaming, which ended in an April 2026 jury verdict of $420 million — reported as the largest Lanham Act damages award on record, with a separate disgorgement figure still to be set by the court.1Law360. Mobile Game Co. Hit With $420M Verdict in False Ad Trial2King & Spalding. King & Spalding Secures Largest Lanham Act Award for Skillz It is not the only case in play. Skillz also settled a patent fight with AviaGames for $80 million, is currently suing game developer Tether Studios in Delaware, and has defended shareholder actions tied to its 2020 public listing.
The $420 Million Papaya Gaming Verdict
Skillz sued Papaya Gaming Ltd. and Papaya Gaming Inc. on March 4, 2024, in the U.S. District Court for the Southern District of New York before Judge Denise Cote. The complaint alleged false advertising and unfair business practices under the federal Lanham Act and New York General Business Law § 349.3Justia. Skillz Platform Inc. v. Papaya Gaming Ltd., No. 1:2024cv016464Business.cch.com. Skillz Platform Inc. v. Papaya Gaming Ltd., No. 24cv1646 Papaya is an Israel-based developer of real-money skill games including Solitaire Cash and Bubble Cash, and the great majority of its players are in the United States.5Calcalist Tech. Papaya Gaming Profile
What Papaya Was Accused Of
The core allegation was that Papaya secretly deployed bots while telling users its tournaments matched real humans of similar skill. Papaya’s marketing promised players they would “be matched with other players within the same skill level” and said the company had “no vested interest in who wins or loses.” Its video ads told viewers that outcomes “are directly determined by your level of skill.”4Business.cch.com. Skillz Platform Inc. v. Papaya Gaming Ltd., No. 24cv1646
It was undisputed at trial that Papaya used bots from 2019 until at least November 2023. The court identified two kinds: “liquidity bots” that filled empty tournament slots so games could finish, and “tailored bots” designed to steer specific outcomes for particular players. In tailored sessions, every participant other than the designated human was a bot. Evidence showed successful players were matched against bots programmed to beat them, while struggling players received guaranteed wins that kept them spending.3Justia. Skillz Platform Inc. v. Papaya Gaming Ltd., No. 1:2024cv016466All About Advertising Law. Skill-Based Gaming Companies Face Growing False Advertising Scrutiny
When players asked about bots, Papaya’s customer service told them “we do not use bots” more than 200 times, according to court records. Internal policy required staff to escalate any customer mention of “bots” or “AI” to management, and executives told employees to give vague responses or close the accounts of suspicious users. Several Papaya executives invoked the Fifth Amendment during depositions.3Justia. Skillz Platform Inc. v. Papaya Gaming Ltd., No. 1:2024cv01646
The Verdict and What Is Still Pending
The trial concluded on April 23, 2026. The jury found Papaya liable and awarded Skillz $420 million in compensatory damages.1Law360. Mobile Game Co. Hit With $420M Verdict in False Ad Trial7Bloomberg Law. Skillz’s $420 Million Jury Verdict Sends Signal2King & Spalding. King & Spalding Secures Largest Lanham Act Award for Skillz
King & Spalding tried the case for Skillz, with Lazar Raynal, Craig Carpenito, and Mike Lombardo leading.8Law.com Litigation Daily. Litigators of the Week: A Nine-Digit Verdict for Skillz Papaya moved on May 26, 2026 for leave to contact jurors. Judge Loretta Preska, sitting in while Judge Cote was traveling, ordered that neither side contact any juror until Judge Cote rules. No appeal had been filed in the public docket as of June 2026.9PACER Monitor. Skillz Platform Inc. v. Papaya Gaming, Ltd. et al
The AviaGames Patent Case and $80 Million Settlement
Before Papaya, Skillz sued rival AviaGames Inc. Filed in April 2021 in the Northern District of California, the case alleged that AviaGames’ Pocket7Games and several standalone titles infringed two Skillz patents. The lead patent, U.S. Patent No. 9,649,564, covers a peer-to-peer wagering platform technology in which gameplay differs between tournaments but stays consistent within each tournament’s game instances. Skillz alleged that AviaGames accessed the protected technology during an earlier collaboration and used it to build competing apps.10Bloomberg Law. Skillz Mobile Gaming Company Hits AviaGames With Patent Suit
A jury returned its verdict on February 9, 2024, finding AviaGames had willfully infringed six claims of the ‘564 patent and awarding $42.9 million. The willfulness finding gave Judge Beth Labson Freeman discretion to triple the award.11Bloomberg Law. AviaGames Owes $43 Million Over Mobile Gaming Patent, Jury Says12SEC. Skillz Inc. SEC Filing – Litigation Settlement13Bloomberg Law. Skillz Platform CEO Details Patent Settlement With AviaGames
The Active Tether Studios Dispute
In September 2025, Skillz sued Tether Studios LLC and Tether Games Inc. in the Delaware Court of Chancery. Tether, a developer that licenses Skillz’s software development kit, had notified Skillz it intended to terminate all agreements between the companies effective that month. Skillz sought injunctive and declaratory relief, calling the termination “invalid” and a breach of Tether’s contractual obligations. Two Tether titles, Solitaire Cube and 21 Blitz, are subject to contractual restrictions preventing removal from the Skillz platform for at least 18 months after any termination.14Investing.com. Skillz Disputes Tether Studios Contract Termination, Files Suit in Delaware Court
The dispute hit the stock hard when disclosed: Skillz fell $1.50 per share, about 17%, to close at $7.21 the following day.15PR Newswire. Investor Alert: Pomerantz Law Firm Investigates Claims on Behalf of Investors of Skillz Inc. As of April 2026, the case was in active discovery before Vice Chancellor Morgan Zurn, who trimmed what she characterized as overbroad document requests from both sides.16Law360. As Game Cos. Fight Over Docs, Judge Trims Requests
Investor Suits Against Skillz
Skillz has also defended cases as a target. In May 2021, investors filed a securities class action in the Northern District of California alleging the company and its executives misled shareholders about declining game downloads, revenue recognition, and Android growth projections. The complaint cited reports from Wolfpack Research and Eagle Eye Research questioning Skillz’s metrics.17BusinessWire. Skillz Alert: Class Action Lawsuit Filed Judge Richard Seeborg dismissed the case in March 2023, finding that the plaintiffs had not adequately alleged any false or misleading statement.18Bloomberg Law. Skillz Defeats Investor Lawsuit Over Game Downloads, Revenue
A separate action attacked the 2020 SPAC merger that took Skillz public. In Darcy Lien v. Eagle Equity Partners II, LLC et al (Delaware Court of Chancery, Case No. 2022-0972-PAF), the plaintiff alleged that the board and controllers of Flying Eagle Acquisition Corp. breached their fiduciary duties through a misleading proxy statement about the merger. The case settled for $10 million, with distributions to class members beginning in November 2025.19BLB&G. Flying Eagle Acquisition Corp. / Skillz Inc. Case20Skillz Investor Relations. Skillz Becomes First Publicly-Traded Mobile Esports Platform21SEC. Skillz Inc. Form 8-K
What the Papaya Verdict Has Done to Skillz’s Stock
The verdict rewired the stock chart. Between late February and mid-June 2026, SKLZ climbed about 392%, from roughly $2.53 to $12.45. The move was amplified by a short squeeze, with at least one session gaining more than 200% as short sellers rushed to cover after the trial news.22Tickeron. Skillz Inc. (SKLZ) 392% Surge in 30 Days Fueled by Legal Victory and Earnings Strength
Underlying results improved as well. Fourth-quarter 2025 revenue reached $30 million, up 67% year over year, and full-year 2025 revenue was $104.5 million against $91.4 million in gross profit.22Tickeron. Skillz Inc. (SKLZ) 392% Surge in 30 Days Fueled by Legal Victory and Earnings Strength The company is still unprofitable at the operating level, with a trailing twelve-month operating loss of $65 million and negative free cash flow, and it has disclosed risks including a shrinking user base, continuing losses, and possible NYSE delisting.23Trefis. Skillz (SKLZ) Data The disgorgement figure Judge Cote still has to set will matter to both the market and Papaya’s exposure, and no appellate ruling has yet tested the record verdict.