Court Orders Papaya to Pay Skillz Over Hidden Bots

A federal judge has ordered Papaya Gaming to hand $719 million in profits to rival Skillz for quietly matching paying customers against computer bots while advertising its mobile tournaments as fair contests between real people. Firy Inc. (FIRY ), the holding company that now owns Skillz, disclosed the ruling on July 28, 2026, calling it the largest false-advertising award in U.S. history.

The decision reaches well beyond two feuding developers. Real-money skill gaming survives in a narrow legal lane: contests decided by skill rather than chance fall outside most gambling laws, which is what lets players stake cash on a round of solitaire or bingo without a casino license. The ruling gives regulators and consumer lawyers a tested argument that undisclosed bots can push a game out of that lane and into illegal gambling.

How Papaya became the house

Skillz, founded in 2012, built the model: a platform where players pay entry fees to compete head-to-head for cash, with outside developers plugging in their own titles. Papaya, an Israeli company behind Solitaire Cash, Bingo Cash, and Bubble Cash, entered the market in 2019 and grew fast, helped by near-instant matchmaking while Skillz players often waited minutes for an opponent.

That speed, the court found, was manufactured. Evidence at trial showed Papaya ran two kinds of bots: “liquidity” bots that filled tournaments with instant opponents, and “tailored” bots engineered to lose on cue, handing a faltering player a win to keep them buying into more tournaments. Judge Denise Cote, who heard the case in the U.S. District Court for the Southern District of New York, found the tailored bots operated in more than 630 million tournaments, about a quarter of the 2.6 billion Papaya hosted between 2021 and 2024. Some 20-player tournaments matched a single human against 19 bots.

Bots outnumbered people. Across those years Papaya fielded more than 13 million bot entrants against roughly 11 million human players, and about $4.7 billion of the $6.7 billion in prizes it advertised never reached a customer, because its own bots “won” the money. The company, in the court’s account, was effectively playing the house.

Where a skill game becomes gambling

A unanimous jury had already found on April 23, 2026 that Papaya’s marketing was false and deceptive, awarding $420 million under federal false-advertising law and New York’s consumer-protection statute. Cote’s order swaps that figure for a larger $719 million, the profit Papaya must give up. Because a plaintiff can be paid only once for the same injury, the handover replaces the jury’s damages rather than adding to them. She also rejected every post-trial motion Papaya filed to overturn the verdict, added roughly $10 million of Skillz’s legal fees, and tacked on costs tied to Papaya executives invoking their right against self-incrimination during pretrial questioning.

The theory underneath is what compliance teams across the sector will be studying. As the law firm Perkins Coie noted in an analysis of the case, house-controlled bots that are never disclosed can strip out the skill that keeps these games legal, turning what looks like a contest into a wager on an outcome the operator secretly controls. Under New York law, that is gambling. Courts elsewhere are policing the same boundary; a Washington judge found prediction-market operator Kalshi likely an illegal gambling site. The verdict effectively hands plaintiffs’ lawyers a jury-tested script for arguing that customers on any bot-using platform were deceived into illegal betting, raising the prospect of copycat class actions and regulator interest.

That exposure is not hypothetical for Skillz’s rivals. The judgment is one of several courtroom fights now unsettling the gaming and betting industry, and Skillz has pursued similar bot claims against Avia Games, which it settled for $80 million, and against Voodoo.

What comes next

Papaya says the fight is not over. It called the outcome disappointing and said it is weighing all options, including an appeal, while maintaining that it has stopped using bots. A separate decision on Skillz’s request for a court order restricting Papaya’s future conduct is still pending, and Firy has cautioned investors that collecting from a privately held foreign company is far from assured.

For Skillz founder and chief executive Andrew Paradise, the ruling answers years of doubt about the company after its market value collapsed from billions of dollars. Papaya “used bots to fake the competition we invented,” he said, and the judgment “sets the record straight.” The larger marker it sets is for everyone else selling real-money skill: quietly letting the house play now carries a nine-figure price.