Articles Business Crime & Financial Services 3rd Mar 2015

Phillip Ivey v Genting Casinos UK Limited

The Claimant, Phillip Ivey, is a professional gambler and one of the world’s finest poker players, known as an “advantage player”. The Defendant, Crockfords Club, is a casino in Mayfair. On the 20th and 21st August 2012, assisted by another professional gambler Ms. Sun, he played Punto Banco (a card game) at the Crockfords Club and won over £7.7 million using a technique called “edge-sorting”. The Defendant refused to pay the winnings on the grounds that the Claimant had cheated. The Claimant denied he had cheated and asserted he had acted lawfully throughout.

Punto Banco is a variant of Baccarat. In the game, cards are dealt face down from a shoe, in strict sequence, by a croupier. Players bet on which of two hands (the “Player” or the “Banker”) will be nearest, when added together, to a total of nine. Players bet before the cards are revealed, so it is not a game of skill as theoretically no player will know which cards are about to be dealt. Due to the rules about how cards are dealt, in the long term the casino or “house” will have a mathematical advantage of just over one percent.

Edge-sorting: It is possible for the manufacturing process to cause tiny differences to appear on the edges of the pattern on the back of playing cards so that, for instance, one long side of a card will be marginally different to the other. The cards used at the Defendant’s casino had this characteristic. It is possible for a sharp-eyed person such as Ms. Sun to identify this difference.

In Punto Banco, it is an advantage to know which cards have a face value of seven, eight or nine. If a player knows which cards have these values then they will have a long-term advantage over the casino of about six and a half percent.

With Ms. Sun’s assistance, the Claimant played for several hours in the casino and, stating that he was superstitious, convinced the croupier to rotate by 180 degrees the sevens, eights and nines (and thereafter kept playing with the same winning deck of cards without any of the cards being rotated during shuffling – this was achieved by requesting a shuffling machine). Casino staff are, apparently, used to high-rolling clients making strange requests in the name of luck and are trained to keep them happy. The croupier, however, was not aware that the Claimant’s request had led to the sevens, eights and nines facing the opposite way to the other cards i.e. that they had been edge-sorted by being rotated. This meant that Ms. Sun was able, with significant accuracy, to predict the value of the first card in the shoe that was to be dealt.

Once the edge-sorting process had been completed, the Complainant, guided by Ms. Sun, increased the value of his bets, and his accuracy in choosing the winners increased sharply. When the Complainant stopped gambling on the evening of 21st August, he was given a receipt for his winnings of over £7.7 million and was informed the money would be wired to him.

The casino became suspicious and, after an investigation, refused to pay, stating that the game had been compromised. The Claimant sued the Defendant for his winnings. The Claimant said that it was legitimate “advantage play” – using some failing in the casino’s procedures to gain an edge; the Defendant said that Mr Ivey had cheated.

In deciding the case Mitting J found that it would turn solely on whether or not the Claimant’s conduct amounted to cheating. If so, the claim would fail. This was the first time that an English court had to determine whether or not the conduct of a party to a gaming contract amounted to cheating.

Mitting J drew a distinction between criminal and civil definitions of cheating.

Criminal Cheating

The criminal definition is found in section 42 of the Gambling Act 2005, which provides:

“(1) A person commits an offence if he (a) cheats at gambling, or (b) does anything for the purpose of enabling or assisting another person to cheat at gambling.

(3) Without prejudice to the generality of subsection (1) cheating at gambling may, in particular, consist of actual or attempted deception or interference in connection with (a) the process by which gambling is conducted…”.

Mitting J found that there were “difficulties with the current English statutory definition” because it appears to define deception and interference as cheating, but there is no attempt to define the overall concept of cheating. He expressed doubt as to whether dishonesty was a necessary element of the act of cheating “it is not obvious whether Ghosh [1982] QB 1053 dishonesty is a necessary element of the offence, or if it is, how in the unusual circumstances of a casino it is to be measured”. Mitting J reviewed the criminal law of England and Wales and other jurisdictions and deduced that “for some of the time at least winning at cards by ill practice has been acknowledged to amount to cheating”.

Mitting J did not determine the issue of criminal cheating as he felt it unnecessary to do so in view of his conclusion on civil cheating: “what precisely is condemned as cheating by section 42 of 2005 Act and what must be proved to make out the offence is not, in my view, clear and it would be unwise if it is unnecessary, as it is, for me to attempt to determine what that might be”.

Civil Cheating

There is no general agreement in the civil law as to what constitutes cheating, but ultimately Mitting J drew a parallel with the court’s role in deciding the standard of honesty expected of businessmen and trustees. He found that the standard is objective, and does not necessarily involve an element of dishonesty or deception.

Mitting J accepted the statement in the case of Starglade Properties Ltd v Nash [2010] EWCA Civ 1314 at [32] that “ultimately, in civil proceedings, it is for the court to determine what that standard is and to apply it to the facts of the case.”

The fact that the Claimant is genuinely convinced that he is not a cheat is not determinative; it is necessary to analyse the consequences of the Claimant’s conduct:

  1. He gave himself an advantage which the game precludes – knowing, or having a good idea, whether the first card was or was not a seven, eight or nine. This was not a practice like counting cards where a player can use knowledge that has been legitimately ascertained to gain an advantage.
  2. He was personally responsible for this advantage – he actively caused the croupier’s behaviour and used her as his innocent agent or tool by rotating the sevens, eights and nines differentially. He was not simply taking advantage of some error or procedural failing outside of his control.
  3. Neither the croupier nor the casino was aware of the consequences of his requests – he converted a game in which both sides have equal knowledge (zero, in theory) into a game in which his knowledge was greater, without the casino being aware that this was so.

In Mitting J’s view this amounted to cheating for the purposes of civil law and found in favour of the Defendant. This will be a salutary lesson for other professional gamblers who might be tempted to adopt similar practices in the future. They also ought to be aware of the potential criminal liability which might ensue. Although Mitting J. declined to resolve the point, the Claimant pretending to be superstitious when he was not must mean that he was perilously close to the wrong side of that particular line. As Mitting J accepted it was legitimate for a shrewd and numerate poker player to pretend to be a fool – that was by itself on the right side of the line separating cheating from legitimate gamesmanship.

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