On Thursday, the Michigan Gaming Control Board (MGCB) ordered a leading online facilitator of supposedly peer-to-peer skill gaming contests to cease business in the state.
Israel-based Papaya Gaming, which claims to operate skill games on its mobile apps, has been accused of facilitating illegal gambling. The mobile platform, where players stake wagers before competing head-to-head in titles like Solitaire Cash, Bubble Cash, Bingo Cash, and 21 Cash, has come under scrutiny following accusations from rival Skillz and a class-action lawsuit brought by dissatisfied customers.
The MGCB initiated an internal probe into Papaya’s activities after receiving an anonymous tip suggesting that the company was violating Michigan’s gambling laws. The investigation concluded that Papaya’s operation of its skill-based products constituted illegal gambling in the state.
“The Michigan Gaming Control Board firmly believes in a regulated and safe gaming environment,” said MGCB Executive Director Henry Williams. “Illegal gambling is not tolerated in Michigan, and we will take all necessary actions to protect our residents from such unlawful practices.”
Consequently, the gaming regulator issued a cease-and-desist order demanding that Papaya withdraw from the state within 14 days or face legal action. Papaya responded by stating that it complies with all applicable laws and regulations in the jurisdictions where it operates and expressed confidence that it will continue to do so lawfully in Michigan.
Michigan gaming regulators determined that Papaya’s business operations violated the Michigan Gaming Control and Revenue Act and the Michigan Penal Code, making Papaya liable for severe penalties. Running an unlicensed gambling operation in Michigan is classified as a felony, which can result in a punishment of up to ten years in prison and fines reaching $100,000.
Papaya has rejected claims that it uses computer bots or operates as a gambling entity. In an earlier statement, the company accused Skillz of running a smear campaign against its competitors. Papaya described Skillz’s actions as deceitful and hypocritical, alleging that Skillz has engaged in tortious and deceptive conduct while masking itself as a crusader for fairness.
Skillz’s federal complaint against Papaya is ongoing in New York’s Southern District, while a similar lawsuit against Paris-based Voodoo Gaming remains active in the same jurisdiction. A spokesperson representing Skillz accused Papaya and Voodoo of using foreign laws to conceal their activities, suggesting that both companies are hiding behind legal technicalities to avoid scrutiny.
While Papaya faces the MGCB’s directive, other competitors such as AviaGames, another peer-to-peer skill gaming network, continue to operate. AviaGames has faced similar legal challenges from Skillz and consumers but remains active in Michigan. Voodoo’s operations are also still live in the state.
Skillz, a pioneer in the online head-to-head skill gaming industry, has become a business-to-business service provider that offers its patented “software development kit” (SDK) to mobile game developers, including AviaGames. In February, a federal jury in California ruled that Avia must pay Skillz $42.9 million for willful infringement of the SDK. The jury found Avia’s defense of using “historical playthroughs” to be a facade for the use of bots, therefore ruling in favor of Skillz.