In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Chips (pd)The running battle between the Borgata and world renowned poker player Phil Ivey (among others) continues, and, fortunately, continues to be interesting. As I wrote about here and here, the Borgata sued Ivey and an associate, Cheng Yin Sun, after the two men won more than $9.6 million playing Baccarat at the casino. The Borgata claimed that the two men used an impermissible "edge sorting" scheme  to win the money, and therefore breached their implicit contract with the casino to abide by the terms of the Casino Control Act. The scheme relied, in part on an alleged defect in the playing cards, which Ivey and Sun knew about and exploited. The Third Circuit described it as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successfully moved for summary judgment against Ivey and Sun, and was awarded more than $10 million in damages.

In addition to suing the players, the casino also sued the manufacturer of the cards that were used in the edge-sorting scheme. Both moved for summary judgment, and both motions were initially denied without prejudice. After the district court's decision on the casino's summary judgment motion against Ivey and Sun, both renewed their motions. The district court again denied both, but in doing so, threw cold water on the casino's claims against the manufacturer, including holding that the most the casino could recover against the manufacturer was $26.88, the cost of the allegedly defective cards.

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“Marking” Cards At A Casino = Breach of Contract

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Casino (pd)If you have ever watched ESPN's coverage of the World Series of Poker then you have probably heard of Phil Ivey. For the uninitiated, he is, according to Wikipedia, "an American professional poker player who has won ten World Series of Poker bracelets,  one World Poker Tour title and appeared at nine World Poker Tour final tables . . . [and is] . . . regarded by numerous poker observers and contemporaries as the best all-around player in the world." He is also a party in an interesting lawsuit — Marina District Development Co., LLC v. Ivey — in which it was alleged that he "marked cards" during several Baccarat binges at the Borgata in Atlantic City, during which he won more than $9.6 million.

Before turning to the facts and law at issue in the Borgata case, a few comments on the opinion itself. First, Judge Hillman began his opinion by quoting from a relatively obscure U2 song, "Every Breaking Wave." The lyrics are appropriate — "Every breaking wave on the shore/Tells the next one 'there'll be one more'/Every gambler knows that to lose/Is what you're really there for" — but I thought it was an interesting choice given all the other possible gambling quotes from music and popular culture that were available to him. (I went for a much more obvious choice in my post the other day.) Second, the opinion begins with a succint explanation of gambling: noting that it is illegal, likely because of a "Judeo-Christian doctrine [] that gambling is an immoral vice;" but, "like most vices," states "allow, regulate, and tax some versions of it" under the theory that "[s]tate sanctioned gambling will be cleansed of its most unsavory elements and the games will be conducted under a defined set of polished rules overseen by an administrative body;" and finally that, under these "polished rules," the house always wins, "something every gambler knows." 

With this history in mind, the court turned to the facts of the case. Defendants were Ivey and Cheng Yin Sun, "high stakes' professional gamblers." In April 2012, Ivey contacted Borgata to set up a visit to play high-stakes Baccarat. He made five requests in advance of his visit: (1) a private "pit"; (2) a dealer who spoke Mandarin; (3) a guest (Sun) to sit with him at the table; (4) one 8-deck shoe of "purple Gemaco Borgata playing cards" to be used during the entire session; and (5) an automatic card shuffler to be used instead of a hand shuffle. Borgata agreed and Ivey wired a "front money" deposit of $1 million to the casino. After this initial visit, in which Ivey won $2.4 million, he and Sun came back several more times and played pursuant to the same conditions.

Continue reading ““Marking” Cards At A Casino = Breach of Contract”