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Skillz Inc. is accused of setting up a fake consumer information site to sabotage competitors.
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Papaya Games alleges that Fair Play targeted its competitors by encouraging complaints to authorities.
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The new court filing sheds light on the unattractive yet cruel world of mobile casino gaming.
It could be that a company offering casino games has made the wrong bet.
A new court document accuses Skillz Inc., a struggling mobile gaming company, of trying to sabotage its rivals by creating a fake consumer advocacy website.
The website, 4 Fair Play, encouraged people to file complaints with law enforcement agencies across the country, asking them to investigate Skillz’s competitors, who develop similar games.
The allegations were made in a counterclaim filed in court on Monday by one of those competitors, Papaya Games. Papaya says 4 Fair Play was a fraudulent organization created by a consulting firm that Skillz had hired. While 4 Fair Play claimed to be “bringing fairness to mobile gaming” by promoting “fair policies” and prompting state attorneys general to investigate gaming companies, its real goal was to target Skillz’s rivals, Papaya alleges.
The organization’s website, 4FairPlay.org, is no longer active. A screenshot of the site submitted as evidence in court shows a pie chart purporting to show mobile games with the “highest complaints.” It includes games produced by Papaya and Avia, another leading mobile game company — but not Skillz itself.
A request for comment, sent to an email address affiliated with 4fairplay.org, was not immediately returned.
The legal tug-of-war sheds light on a fierce battle for dominance of a relatively unattractive, but important, corner of the gaming industry.
Games like 21 Blitz, Solitaire Cash and Bingo Cash aren’t as popular as the latest Pokemon and Grand Theft Auto offerings. But they’re a hot segment of the mobile gaming market, which is valued at nearly $150 billion by 2023, according to Straits Research.
These casino games are skill-based but resemble gambling, which is strictly regulated.
Skillz Inc, founded in 2012, was once one of the biggest players in the casino-style gaming space. Rather than developing games themselves, it differentiated itself by being a platform for other developers to create games on the Apple and Android app stores.
The company peaked in 2021 with revenue of $384 million, according to Bloomberg News. Since then, the company has been on the decline, according to public securities filings. The stock has fallen from nearly $900 a share in February 2021 to about $6 a share today.
Papaya is privately held and does not disclose its financials. In a statement Monday, a Papaya spokesperson said Skillz “has engaged in a pattern of unlawful and misleading conduct.”
“The counterclaims describe how Skillz — with its underperforming business — has launched a deceptive campaign against Papaya by falsely claiming that Skillz is a virtuous crusader for honesty, while accusing others of the same type of deceptive behavior as itself,” the spokesperson said.
4 Fair Play helped people file complaints with their attorney general
The 4 Fair Play website informed visitors that the games Papaya had developed were a “scam” and created a complaint form that people could submit to their state’s attorney general.
“A successful investigation could force the companies to pay consumers for damages,” the website says. “Make sure you are one of them!”
According to Papaya’s counter-complaint, Fair Play failed to provide forms for complaints about games distributed by Skillz.
According to Papaya’s complaint, the website posted a counter-notice stating that tens of thousands of players had filed complaints.
But every time a visitor navigated to the page, the counter showed that exactly 12,594 people had filed complaints — regardless of when they visited. The counter then ticked upward every few seconds.
According to Papaya’s filing, the counter was not linked to a live database.
“The source code of the 4FairPlay website shows that the original number of complaints and the increase percentage were chosen by Skillz,” the complaint states.
According to Papaya — citing documents obtained through court proceedings in other lawsuits — the 4 Fair Play website was created by an organization hired by an individual named Josh Levin, who runs a consulting firm called Square Strategies LLC, which in turn received more than $75,000 from Skillz. A Skillz executive provided commentary on the design of the 4 Fair Play website, according to screenshots of a website mockup that were entered into court as an exhibit.
Levin declined to comment on the case.
A Skillz spokesperson told Business Insider after this article initially published that the company was a “founding supporter” of 4 Fair Play. It also reiterated claims made in a lawsuit it filed against Papaya, accusing the rival company of fraud.
“Skillz is a founding supporter of 4FairPlay and supports their work,” the spokesperson said. “It is not surprising that a company accused of fraud responded by attacking a website that sought to expose fraud.”
Papaya made its claims in a counterclaim to the lawsuit Skillz originally filed in March.
Papaya’s games allow users to play against other users and win money. In order to quickly match players of similar skill levels, the games require large user bases.
According to Skillz’s lawsuit, Papaya stole market share by often pitting real users against bots instead of real users. And by using bots, Skillz also alleges that Papaya tricked its players into participating in illegal gambling — where winnings are based on chance — instead of legal skill-based play. Skillz has made similar allegations against other competitors in other lawsuits.
In court documents, Papaya says it uses bots only in tutorials and not in actual gameplay. But in Monday’s counterclaim, it said Skillz games do use bots.
The dossier referenced Skillz’s own developer documentation, which includes a section on the “use of bots in gameplay.”
“It is clear that Skillz’s repeated and widely publicized representation that its platform will ‘never’ use bots is false and misleading,” the lawsuit states.
This story has been updated with a response from Skillz.
Read the original article on Business Insider