A New York federal judge rejected Papaya Gaming’s motion to dismiss the lawsuit against it by rival skill gaming company Skillz. The latter company has accused Papaya of deceiving its users by pitting them against house-controlled “bots” while implying that its real-money contests are player-vs.-player.
Papaya hasn’t confirmed or denied the practice in question. However, accepting the factual allegation as accurate for purposes of its motion to dismiss, it argued that using bots wouldn’t be deceptive as it never explicitly claimed otherwise.
US District Judge Denise Cote rejected that argument on the basis that implied claims can be misleading, legally speaking, even in the absence of a direct and literal falsehood. She wrote:
The complaint plausibly alleges that Papaya employs bots as ‘players’ in its competitions while creating the impression that all players will be human competitors. Its references to ‘players,’ ‘individuals,’ ‘winners,’ ‘fair’ and ‘skill-based’ may be found by a jury to imply that Papaya’s games of competition are conducted among human players only and not among humans and bots[…] While a false denial about the use of bots would be actionable, it is not the only way in which a consumer may be misled.
It will be up to a jury to determine whether Papaya’s ads were, in fact, misleading. That’s assuming the case doesn’t end in a settlement before that point. For the case to survive the motion to dismiss, Judge Cote merely needed to find it plausible that a jury might agree with Skillz.
Why is Skillz Suing Rival Companies for Botting?
Papaya is the second rival Skillz has accused of botting in a lawsuit. However, it’s the first time those accusations have been central to the case. The first case was a patent infringement suit against AviaGames, which ended in victory and a $43 million judgment for Skillz. Avia’s apparent use of bots came up in the course of discovery, producing a separate lawsuit by players and a federal indictment.
Skillz, Papaya, and AviaGames have similar products that pit players against one another (or, maybe, bots) in games of skill with cash prizes on the line. The main difference is that Skillz produces only the platform, while its games come from third parties. AviaGames and Papaya make their games in-house.
It’s natural that players might want to sue over such alleged practices. It might be less obvious to a neutral observer—or a court—how Skillz sees itself as a victim.
That was also one of Papaya’s arguments for dismissal: that Skillz can’t demonstrate that it was harmed by any of Papaya’s allegedly misleading marketing.
Skillz’s counterargument is that Papaya’s ads may have enticed some players who otherwise would have played on Skillz. Furthermore, once players have signed up for one skill gaming platform, convincing them to switch to another becomes more difficult. Therefore, Skillz argues that if the ads are misleading, they have been harmed by Papaya’s unfair business practices in the form of lost customers.
Judge Cote agreed with Skillz on this front, too, with the caveat that it might be challenging to put a dollar value to the loss when assessing monetary damages. Her opinion states:
Skillz has adequately pleaded an injury from Papaya’s false advertising through a loss of sales and market share. While a difficulty in quantifying its monetary losses may prevent it from obtaining an award of damages, it would not prevent it from obtaining injunctive relief and disgorgement, which it has also sought.
Papaya Continues to Deny Allegations
After the publication of this article, a public relations agent representing Papaya contacted Bonus with the following statement on behalf of the company:
Papaya is one of the world’s largest skills-based mobile game developers – on a mission to bring more fun challenges to the world. We are absolutely committed to fair and enjoyable skills-based mobile gaming that rewards the abilities of our players. Papaya continues to believe that the complaint filed by Skillz is meritless, and will vigorously defend against any and all baseless claims while remaining focused on our mission.
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