Skillz Responds to Online Card Gaming Lawsuit
The case hasn’t gotten much attention in the world of gambling, but it involves online card games and allegations of an “illegal gambling racket.” And it is playing out in the United States District Court in Nevada with a website called Skillz at the center of it.
Two plaintiffs – Alyssa Ball and John Prignano – filed the lawsuit against Skillz in mid-May. They listed nine counts against the defendant, including fraud, negligence, and unjust enrichment.
Originally, the court gave Skillz until June 10 to respond to the lawsuit, but the defendant requested and obtained an extension. And Skillz did file a response by the new date of July 10.
In the most basic terms, Skillz filed a motion dismiss the case due to a violation of the federal rules pertaining to arbitration agreements. If that doesn’t work, Skillz wants certain counts dismissed.
Case Summary Reminder
Skillz is an app that offers virtual puzzle challenges like Sudoku and card games resembling versions of bridge, hearts, and Chinese poker. Players can purchase virtual currency with real money and play with that virtual currency, ultimately vying for real cash and prizes. Skillz matches players by skill levels and fosters that competition.
Plaintiff Alyssa Ball began playing in August 2019 and specialized in a game called 21 Blitz. She initially lost about $50K but then devised some strategies that made her a winning player. That was until she lost approximately $650K to a player. Ball determined that that player cheated.
When Ball she took her complaint and evidence to Skillz, they suspended Ball’s account and suspended her account. And after she tracked down CEO Andrew Paradise, explained the situation, and rejected his subsequent advances, Skillz officially closed Ball’s account and seized the $28K in it.
Plaintiff John Prignano started playing 21 Blitz in December 2018. Similarly, he also lost money in the beginning but developed strategies and won consistently. He also accumulated points as he played and chose to exchange those points for a Porsche luxury car.
Skillz then raised the number of points required to earn the car and began to accuse Prignano of cheating, Prignano examined play history to determine that a player had cheated him out of nearly $1 million. Instead of an investigation, Skillz closed Prignano’s account and seized his $286K balance.
We explained in more detail here and obtained statements from Mac VerStandig, attorney for the plaintiffs, and a Skillz spokesperson.
ICYMI: Online poker/gaming lawsuit filed in NV court this month accuses the company of "fraud via illegal gambling racket" – updated with statements from @skillz & @mac_verstandig https://t.co/yo4lgcKmLw pic.twitter.com/6E8oNljdL1
— Legal US Poker (@legal_poker) June 18, 2020
Defendant’s Arbitration Argument
The bottom line of the Skillz argument is that the lawsuit is a violation of the arbitration agreement on the company website, one to which all players agree.
However, if that doesn’t work, Skillz says the plaintiffs lack “constitutional or statutory standing.” Skillz claims the plaintiffs filed the case “to make false public allegations that would be protected by the litigation privilege in an improper attempt to extract money from Skillz.”
Interestingly, Skillz refers to its games – many of which share remarkable likenesses with card games – as esports competitions.
According to Skillz, the company banned Ball and Prignano “after an investigation determined that they were conspiring with each other to cheat on Skillz’ platform.” Reportedly, the two plaintiffs worked together and stopped heads-up games against each other for refunded entry fees. The company accused Prignano of “pool-style hustling.”
With regard to the claims, the document reads, “It is all nonsense and will be exposed as such if plaintiffs are ever put to their proof.”
If the Arbitration Argument Fails…
The first motion from Skillz is one to dismiss the case on the basis that the players agreed to the terms of service and an arbitration agreement and violated them by filing this lawsuit.
In lieu of that claim, Skillz also argues against several of the nine counts named in the original complaint.
Count 4: Negligent Misrepresentation
Skillz claims that plaintiffs do not have Article III standing, meaning they didn’t suffer a concrete injury, an injury that is traceable to the actions of the defendant, and didn’t show an injury that could be redressed by a favorable decision.
Counts 5 & 6: Negligence Per Se
Skillz says the plaintiffs do not have statutory standing and failed to state a claim.
Documents Redacted and Under Seal
Skillz filed three of the exhibits with the its filing under seal: email exchange between Skillz and Ball on April 28, 2020; email exchange between Skillz and Prignano on March 13, 2020; and email exchange between Skillz and Prignano on January 14, 2020.
In addition, the declaration of Elliott Kaplan, Skillz’ Vice President of Customer Advocacy, is partially redacted, though only seemingly to protect the email addresses of the plaintiffs from public view.
The motion to leave the other documents under seal claims the same, as the company does not want to publicly divulge personal email addresses.
We await the argument from VerStandig on behalf of the plaintiffs opposing the motion to dismiss. They will likely file within the next three weeks.
From there, the judge may set a time for oral arguments, which will likely be done virtually, regarding all of the challenged motions.