Skillz challenged in civil lawsuit over alleged "illegal gambling racket"
Online Poker Report

Real-Money Gaming Company Skillz Faces $6 Million Lawsuit For Fraud, Negligence

Skillz cheating fraud lawsuit

Two customers are suing real-money gaming company Skillz for nearly $6 million on nine counts related to fraud and negligence.

Alyssa Ball of Nevada and John Prignano of Texas claim that Skillz failed to act against an unnamed high-stakes cheater and refused to make good on commitments laid out in its policies and rewards program.

For its part, Skillz accuses both complainants of being involved in a cheating scheme of their own. It seized their substantial account balances, so one major goal of the lawsuit is to reclaim those funds.

The plaintiffs served Skillz with its summons on May 17, demanding a response by June 10. The company petitioned the court for an additional month, however, and succeeded in having the deadline pushed back to July 10.

Ball and Prignano are represented in their suit by VerStandig Law, which specializes in gaming and business litigation. The firm is well-known in the gambling word for its involvement in a number of high-profile cases, including the pending California lawsuit against alleged cheater Mike Postle.

The skill gaming loophole

Legal definitions of betting and gambling vary by jurisdiction. Many, including those used by US federal law, include a reference to chance.

This description is at the root of a long-standing legal argument about whether games like poker — which include elements of both skill and chance — qualify as gambling.

Similarly, there have been numerous attempts to create new forms of wagering which don’t technically qualify as gambling.

Daily fantasy sports (DFS) is the best-known and most-successful such attempt. Skill-based gaming machines resembling slot machines or arcade games are also a perennial dispute in several states, while sweepstakes sites like Global Poker skirt gambling laws by removing “consideration” from the three-pronged test.

Skillz’s business model exploits the same loophole as DFS, offering real-money contests with fixed prize pools. Unlike DFS companies, however, Skillz provides only a platform for account management and matchmaking. The games themselves are created by third-party developers and distributed through the iOS App Store and the Skillz website.

Skills claims its top 10 players have won a combined $33 million.

What is 21 Blitz?

There are many games available on the Skillz platform, but the most popular of these is 21 Blitz. The title, which resembles a cross between blackjack and solitaire, is at the core of the lawsuit.

Although the strategy is simple, 21 Blitz a timed game. Making the correct decisions quickly is therefore the key to achieving a high score. That score is then compared to those of other competitors in order to determine the winner of a given matchup.

The type of cheating alleged in the suit involves exploiting a way to pause the game. This would allow the cheater to take the time to calculate the mathematically optimal plays. It would be possible to do the same without pausing, but the time required would mean losing points.

From the complaint:

John Doe would cheat in such games by, inter alia, utilizing a function wherein he could pause the subject games with appreciable frequency so as to count cards.

For the avoidance of doubt, John Doe was not merely mentally counting cards; by pausing the 21 Blitz app, he was able to keep detailed records of cards distributed and, inversely, cards remaining in each game’s deck, and to then exploit such records to make optimal plays.

Meet the Skillz contestants

The story laid out in the suit involves six total parties. Aside from the complainants themselves, there is Skillz CEO Andrew Paradise and three other players whose identity the plaintiffs have elected to keep concealed for now. The filing refers to these players as John Doe #1-3.

Ball and Prignano were Skillz customers who played 21 Blitz for the highest stakes available, which averaged hundreds of dollars per game. Few players are willing to play for those stakes, so they frequently competed against each other and the John Does under Skillz’s matching system.

Both stories begin and end in similar places.

The plaintiffs each discovered 21 Blitz and initially lost thousands of dollars before, they claim, mastering the game and beginning to win. Both then lost large sums to John Does before ultimately being banned by Skillz for allegedly participating in a cheating conspiracy of their own. According to the complaint, the company seized their remaining account balances at that time.

Despite those similarities, there are also several important differences between the experiences Ball and Prignano describe.

Ball’s allegations

The events leading to the lawsuit began with Ball’s email complaint to Skillz after she learned of a company email allegedly warning Doe #1 that he was under suspicion of cheating.

Unusually, the complaint indicates that the correspondence offered Doe the chance to continue playing. Skillz simply demanded that he reaffirm his agreement to the terms of service and warned that continued cheating would result in the forfeiture of account funds.

Ball says she lost about $650,000 to Doe, including games both before and after the date of the email. According to Skillz’s published policies, Doe’s account should have been suspended as soon as he was suspected of cheating.

Per the complaint, Skillz instead indicated that it would not close Doe’s account or refund Ball. When she persisted, it suspended her account instead — after she provided the requested documentation and even traveled to San Francisco to verify her identity in-pers0n.

Ball then reached out to Paradise directly through Instagram. Not immediately understanding who she was, Paradise allegedly attempted to flirt with her and arrange to meet up in Las Vegas. He broke off the conversation once she explained why she was approaching him, saying his team was concerned she and Prignano were part of a cheating ring.

Shortly thereafter, Skillz purportedly closed her account and seized the $28,000 balance it contained.

Prignano’s allegations

Prignano alleges he was cheated by all three John Does. His initial complaint with the company was not related to cheating, however, but rather the redemption of rewards points known as Ticketz.

One of the top-tier rewards items Skillz offered its most valuable players was a Porsche Boxter. Prignano claims his high-stakes play allowed him to accumulate enough Ticketz to claim the car.

After initially stalling, Prignano claims the company hiked the Ticketz cost of the Boxter by 66% without notification. He further contends that he was offered a used Boxter in lieu of the new model advertised on the website. After he continued to push, Skillz allegedly accused him of cheating, closed his account, and seized the approximately $286,000 it contained.

Prignano also claims he lost a total of approximately $1.3 million to the John Does.

Ball and Prignano deny any wrongdoing, whether separately or as part of a coordinated cheating ring. By their telling, the accusations against them are a fabrication by the company. They claim Skillz is seeking avoid its responsibilities both in terms of dealing with the actual cheater(s) and in making good on the commitments laid out in its rewards program.

The complainants also allege that Skillz games constitute an “illegal gambling racket” and that its marketing is misleading in that regard.

The Skillz side of the story

Counsel for Skillz provided this statement regarding the litigation:

“This suit was filed by two people who colluded to cheat the Skillz community. They were caught by our trust & safety team and kicked off of our platform in accordance with our terms of service and commitment to honesty, integrity and fairness. Their case has no merit and is an attempt to intimidate our company and obtain illegitimate gains. We will defend ourselves vigorously and are evaluating all legal remedies to protect our community.”

Question marks abound in Skillz suit

Because Skillz succeeded in getting a one-month extension for its response, it will be another three weeks before we see the next chapter in this story.

In the meantime, several conspicuous question marks hang over the case. Most won’t be answered until the plaintiffs and defendant get their day in court, and some may never be known if the case instead ends in a settlement.

The most mysterious aspect concerns the email supposedly sent by Skillz to Doe #1. If the case ends up going to trial, a jury will surely want to know why Skillz allowed him to continue play thereafter. It also seems important to know how Ball came to learn of the contents of that email.

Whatever the outcome, though, this debacle adds to the growing mountain of evidence for the importance of regulation. Companies like Skillz pop up in legal gray areas for the same reasons as illegal offshore gambling sites, and they suffer from many of the same problems.

Aside from the alleged cheating, Skillz has also faced complaints about slow cash-outs, inconsistent record-keeping for real-money games, and accepting deposits from players in banned states.

Such issues are commonplace in black and gray markets and are exactly the sort of thing that regulatory bodies are built to address.

From VerStandig:

“The business model at issue here is a reminder as to why regulatory oversight has been critical to the modern development and expansion of the gaming industry. We have faith in the judicial system and look forward to pursuing our case in court.”

Alex Weldon
- Alex is a freelance writer and artist living in Dartmouth, Nova Scotia. He has been doing data-based analysis of the online gaming industry since 2016.
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