In a court in New York, the hearing began this week in the lawsuit filed by the American gaming company Skillz against the Israeli gaming company Papaya. The lawsuit, which claims damages of hundreds of millions of dollars, was filed over two years ago, and the hearings, which are being held before eight jurors, are supposed to last about two weeks.
Skillis was established in 2012 and was issued on the stock exchange in the USA in 2020. Over the years, its value and revenues fell and as of today, the company’s value on the stock exchange is about 39 million dollars – a drop of more than 98% of the value after the issue.
Founded in 2019, Papaya is considered a leading company in the skill-based gaming category, with four active mobile games and approximately 15 million tournaments held on a daily basis.
According to the lawsuit, Papaya presented its games in an allegedly misleading manner, as a result of using bots (players who are not real people) in the various applications and thus created unfair competition in the market. According to Skills, as a result she suffered hundreds of millions of dollars in damage. According to the lawyers who represent Skillis, the dramatic drop in the company’s financial data comes against the background of Papaya’s use of bots and due to misleading consumers in the advertising of its games. It is also claimed that if it had advertised the use of bots, Papaya would not have grown like this.
In response, Papaya’s lawyers claimed that the evidence would show that there is no connection between Skillis’ business failure and Papaya. According to them, Kealis’s drop in revenue is due to the company’s conscious decision to reduce its investment in marketing expenses. As for the claim of misleading advertising, Papaya has presented evidence that she claims contradicts Kellis’s statements. Papaya’s attorneys also added that the evidence will show that, unlike Skillz, the company places a significant emphasis on the user experience of its games and the evidence for this is the high ratings that Papaya’s games receive.
They also added that Papaya produces fair and skill-based games only, and presented to the jurors how the company matches players, and what its revenue model and its games are. At the end of her opening remarks, Papaya attacked Skillis’ claim of damages of hundreds of millions of dollars, when she claims that there is no connection between the financial data of the two parties.
In the news published yesterday about the trial on the Bloomberg Law website, it was noted that according to the explanation of Papaya’s lawyers at the hearing, Skillis’ financial troubles began “long before Papaya was founded”. In addition, during the trial, Papaya emphasized that the evidence will show that the bots she used in the past, and against which Kellis claims, were used solely to fill empty seats in tournaments, to create a fair balance in the levels of the players – and in the end were unprofitable for her at that time. In addition, the article from Bloomberg stated that this is not the first lawsuit filed by Kealis on the subject, and that the company has also sued other competitors in the past.
More than a decade ago, a new category in gaming was born in the US – skill games based on real money – which soon became one of the leaders in the industry. Over the years, several companies were added that led it, among them the Israeli Papaya Gaming, and the older American Skillz. Skill-based games on real money are mobile game applications, which take games that require high skills from the players who play them, such as solitaire, Bubbles and more, and allow users To play against each other when the best wins, and even decide to deposit real money and win cash prizes as you improve and win more games. One of the well-known challenges in this category is the “Match Making” challenge, through which fair tournaments are created with a maximum match between the players who compete based on their level and ability.