Green’s Dictionary of Slang

lulz n.

a phoneticization of textese LOL [’laughing out loud’], mainly used derog.

J, Lanier You Are Not a Gadget 61: The culture of sadism has its own vocabulary and has gone mainstream. The common term "lulz," for instance, refers to the gratification of watching others suffer over the cloud.

In derivatives

lulzy (adj.)

characterized by or productive of lulz .

J, Lanier You Are Not a Gadget 61: I don't think I'm necessarily any better, or more moral, than the people who tend the lulzy websites.