Even in court, it seems, the house still wins.

Professional poker player Phil Ivey found that out the hard way as both the United States District Court and the United Kingdom Court of Appeal recently ruled that his “edge sorting” technique is a form of cheating.

In late October, the United States District Court of New Jersey found that Ivey and another player, Cheung Yin Sun, breached the contract it had with a New Jersey casino while winning more than $9.6 million in high-stakes Baccarat (or punto banco). Baccarat is a card game that relies solely on chance. It is played between the player (punto) and the bank (banco). It has three outcomes: in favor of the player, in favor of the bank, and tie. Cards are dealt from a shoe with the goal of hitting a natural nine or natural eight. The game is enjoyed frequently by high rollers in the casino.

A few weeks after the district court decision, Ivey lost an appeal against Crockfords Casino in a London appellate court after collecting more than £7.7 million in winnings.

What is edge sorting and how did Ivey do it?

In its Oct. 21 decision, the district court discussed the mechanics of edge sorting and what Ivey purported to do in edge sorting:

  • During play, Ivey and Sun used the accommodations they requested from Borgata to ‘turn’ strategically important cards so that they could be distinguished from all other cards in the deck.The dealer would first lift the card so that Sun could see its value before it was flipped over all the way and placed on the table. . . .
  • By telling the dealer ‘good card’ or ‘bad card’ in Mandarin, the dealer would place the cards on the table so that when the cards were cleared and put in the used card holder, the leading edges of the strategically important cards could be distinguished from the leading edges of the other cards in the deck.
  • Upon information and belief Ivey and Sun ‘turned’ the cards with values of 6, 7, 8, and 9, so that they could be distinguished from all other cards in the deck.

(Marina District Development Co. v. Ivey, 2016 WL 6138239 at * 3-4)

What’s the legal standard of cheating?

Borgata Casino contended that Ivey violated New Jersey state law through “cheating and swindling” of the casino. Two statutes in the Casino Control Act (CCA) guided the court’s analysis:

  • 5:11-115(a)(2): to ‘carry on’ with or ‘expose for play’ cards that are marked ‘in any manner’ is expressly prohibited
  • 5:11-115(b): It shall be unlawful knowingly to use or possess any marked cards.

Marked cards were not specified in the CCA, but such process generally involves physical alteration of the playing card in some manner.

Essentially, the court boiled its language down to the fact that Ivey violated an implied contract with the casino through the edge sorting technique. The court noted that in using cards Ivey caused to be maneuvered to identify their value only to him, he adjusted the odds of Baccarat in his favor. In the court’s view, this goes against the fundamental purpose of legalized gambling and the mutual obligation Ivey had with Borgata to play by the rules of the CCA.

Meanwhile, the UK Court of Appeal noted that there was an implied term in the contract between Ivey and Crockfords not to cheat and the meaning of cheating was determinable by Gambling Act 2005. The section allows that a party may cheat without dishonesty or intention to deceive. Depending on the circumstances, it may be enough that he simply interferes with the process of the game.

The lower court judge felt this incident was “cheating for the purpose of civil law.”

In a prepared statement, Ivey articulated that the decisions in the UK case did not make sense.

The trial judge said that I was not-dishonest and the three appeal judges agreed, but somehow the decision has gone against me.

Can someone tell me how you can have honest cheating?

Source: The Guardian

Is this a fair result?

This is an interesting question, given the fact that both Borgata and Crockfords essentially allowed Ivey to dictate the rules to his liking. He set up the game with his rules and under his conditions, which the casino allowed.

Both courts tend to view this decision in terms of Ivey breaking an implied gaming contact. However, did the casino have an affirmative obligation to implement countermeasures to ensure the house’s advantage?  The casinos knew that Ivey was a poker professional and that he plays in very high stakes games. Any advantage that Ivey gained was done with the consent and help of the casino through the casino’s employees. If there was an issue, it should be the casino’s obligation to use these countermeasures.

So, did Ivey tip the scales of the game in his favor? The court ultimately concluded that yes, the edge gained by the 10-time World Series of Poker bracelet winner was a material breach of contract, noting that a reasonable person would say this is cheating.

The casino is highly regulated. It does not try to win every game but the house edge means that it should win over time. Edge-sorting materially altered the odds in the game of Punto Banco offered by Crockfords.

Source: Poker News Daily

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  • See Dan Katz, Phil Ivey Loses Appeal in Crockfords Edge Sorting Case, Pokernewsdaily.com (Nov. 8, 2016).
  • See Gambling Act 2005.
  • See Marina District Development Co. v. Ivey, 2016 WL 6138239.
  • See Nadia Khomami, Poker player loses appeal against London casino over £7.7m winnings, The Guardian (Nov. 3, 2016).