Overview:
New lawsuit alleges that using bots to play against human beings on gambling platforms creates unfair matchups—and false advertising. The house usually wins, but are bots tipping the odds too far?
Case Facts:
Skillz Platform Inc. is a gaming developer considered a pioneer in the peer-to-peer video gaming space. Peer-to-peer connects live players in video games from around the world. Papaya is another skill-based peer-to-peer gaming developer, and one of the largest in the world. Papaya offers players the chance to win cash prizes in the competitions. Papaya advertising states that players are matched with other players of the same skill level, and that games are “fair and skill-based.”
Bot Battle
In March 2024, Skillz filed a lawsuit in the Southern District of New York, alleging that Papaya falsely advertises its players as human. In its motion to dismiss, Papaya argued that it never expressly stated that “peers,” or players, were human. Skillz presented statements made by individuals on review sites, which it said showed that consumers were confused, and referred to Papaya messaging that allegedly implies that players are playing against humans. It argued that Papaya violated the false advertising prohibitions in the Lanham Act by making players believe they are playing against humans and not bots.
U.S. District Judge Denise Cote agreed that Papaya made no statements that expressly stated that players would be playing against humans, but refused to dismiss the case. She ruled that the allegations in the Skillz complaint about Papaya’s implicit representations were material under the Lanham Act, the federal statute that covers trademarks and false advertising. This is an ongoing case, but as in any Lanham Act case, we may see survey evidence brought to the courtroom.
Is Humanity Material?
Papaya does not deny that some of its “peers” are bots. But is that fair play? As this case continues, one of the issues at play will be whether players’ humanity is material to consumers’ choice of gaming platforms. Although the court in this case has presumed materiality, a consumer survey about materiality could provide evidence allowing Papaya to rebut that presumption. Consumer surveys could also be used in this case to measure damages. As we continue to see the use of bots in place of humans, surveys can provide helpful measures of whether humans believe advertising statements have (or should have) adequately disclosed bots.
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