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Commitment and Contingencies | 12 Months Ended
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Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Legal Matters The Company is a party to certain claims, suits, and proceedings which arise in the ordinary course and conduct of its business and has certain unresolved claims pending, the outcomes of which are not determinable at this time. The Company records a liability when it believes that it is probable that a loss will be incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, the Company discloses the possible loss or range of loss. In the Company’s opinion, resolution of pending matters is not expected to have a material adverse impact on the results of operations, cash flows, or the Company’s financial position, as of December 31, 2022. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the results of operations, cash flows, or financial position in a particular period. However, based on the information known by the Company, except as set forth herein, any such amount is either immaterial or it is not possible to provide an estimated range of any such possible loss. On May 15, 2019, a former employee of the Company filed a suit against the Company in the San Francisco Superior Court in California for claims including breach of contract, retaliation and wrongful termination. The case was tried in August and September 2021. The jury found in favor of the former employee and rendered a verdict against the Company for $11.6 million in compensatory damages, and the Company recorded a loss contingency accrual and corresponding general and administrative expenses in such amount in the third quarter of 2021. In April 2022, the judge in the case determined, in light of the Company’s post-verdict motions, that the instructions given to the jury at trial were defective. Accordingly, the judge ordered a new trial on damages or, alternatively, permitted the plaintiff accept a reduced verdict in the amount of $4.35 million, which the plaintiff subsequently levied from the Company’s bank account. On May 25, 2022, the Company filed an appeal from the judgment seeking, in part, entry of judgment in the Company's favor notwithstanding the verdict. The plaintiff accepted the reduced verdict, and filed an appeal from the judgment on June 7, 2022, seeking in part, to reinstate the jury's original verdict. Management believes the most likely outcome is that this matter will go back to trial which would mean that it likely will not be resolved until calendar year 2024. As a result, the liability has been reclassified from a short-term liability to a long-term liability on the consolidated balance sheet as of December 31, 2022. Indirect Taxes During 2022, the Company completed a review with the Australian Taxation Office (ATO) and concluded it was required to register for the Goods and Service Tax (GST) in Australia. In conjunction with this review and the expansion of the Company’s operations in international jurisdictions in 2021 and 2022, the Company reviewed its global indirect tax exposure for the rest of the world. As a result of this review, the Company determined that it is liable for indirect taxation in various countries around the world based on operations in the current fiscal year as well as historical periods. Accordingly, the Company recorded a charge for indirect taxes due in the amount of $2.9 million, $1.9 million, and $0.6 million for the years ending December 31, 2022, 2021, and 2020, respectively, which is included as a reduction to revenue in the consolidated statements of operations and comprehensive loss. For those same periods, $0.6 million, $0.6 million, and $0.1 million were accrued related to interest and penalties, respectively, and were recorded as expenses within general and administrative in the consolidated statements of operations and comprehensive loss. As of December 31, 2022 and 2021, $6.5 million and $3.6 million, respectively, are accrued within other current liabilities on the consolidated balance sheets. These amounts include interest and penalties of $1.4 million and $0.8 million as of December 31, 2022 and 2021, respectively. In some U.S. jurisdictions, non-income-based taxes, such as sales and use tax are assessed on our operations. During 2022, the Company assessed the possibility that the Company has exposure to sales and use tax in various state jurisdictions. There is uncertainty as to what constitutes sufficient presence for a jurisdiction to levy taxes, fees, and surcharges for Skillz’s business, primarily given the nature of its product offering which is not the sale of physical goods, and there is uncertainty as to whether its services are taxable in certain jurisdictions. The Company recorded a charge for indirect taxes due in the amount of $1.4 million, $1.9 million, and $0.4 million for the years ending December 31, 2022, 2021, and 2020, respectively, which are included as a reduction to revenue in the consolidated statements of operations and comprehensive loss. As of December 31, 2022 and 2021, $4.1 million and $2.6 million, respectively, are accrued within other current liabilities on the consolidated balance sheets. These amounts include interest of $0.3 million and $0.2 million as of December 31, 2022 and 2021, respectively. The estimate of a probable outcome under the loss contingency is based on analysis of sales activities, revenue subject to sales and other indirect taxes, and applicable regulations in applicable jurisdictions in each period. Changes in assumptions may occur in the future as the Company obtains new information, which can result in adjustments to the recorded liability.

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