Skillz Inc. (NYSE:SKLZ) saw its stock decline 11.6% in premarket trading Wednesday following the company’s disclosure that Tether Studios plans to terminate all agreements with the gaming platform provider.
A regulatory filing revealed that Skillz received a termination notice from Tether on August 29, seeking to end all agreements effective September 1. The notice impacts major revenue-driving games, including Solitaire Cube and 21 Blitz. Skillz contends that the notice is “invalid and in breach of Tether’s obligations.”
Under the current agreements, Skillz licenses its Software Development Kit (SDK) to Tether to help monetize games, with both companies sharing revenue from user entry fees. The contracts include clauses intended to prevent the removal of Solitaire Cube and 21 Blitz from Skillz’s platform for at least 18 months following termination.
In response, Skillz filed suit on September 1 in Delaware’s Court of Chancery, seeking both injunctive and declaratory relief. The company is challenging Tether’s right to terminate for convenience as well as the alternative grounds for termination for cause, which Tether claims would take effect on September 28 if the convenience termination is not upheld.
Skillz emphasized in its filing that it “can provide no assurances regarding the outcome of the claim and the impact it may have on the Company’s business.”
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