GAMBLER MUST RETURN $10M.
DESPITE BEATING FRAUD CHARGE, POKER ACE PHIL IVEY MUST RETURN $10M IN BACCARAT WINNINGS TO CASINO
In July 2012, Phil Ivey walked into the Borgata Hotel Casino & Spa in Atlantic City, N.J. Over the next 17 hours, he would become nearly US$4.8 million richer.
A gambler by profession, Ivey billed himself as the “Tiger Woods” of poker; he had won more than $6 million from several tours on the World Series of Poker and another US$19 million through years of online poker. But Ivey was not playing poker on that day in July. His winning spree came from baccarat — a game of chance associated with high rollers and would-be James Bonds.
This was not Ivey’s first impressive baccarat run. He visited the Borgata to play baccarat three other times, too, between April and October 2012. His total winnings from those visits amounted to more than US$9.6 million, according to court documents.
Baccarat, as it is played in most U.S. casinos, rewards luck, not skill. Ivey did not have US$9.6 million worth of luck.
Borgata sued Ivey, alleging that the gambler had defrauded the casino. But his winning scheme, once revealed, was not exactly cheating, not in the eyes of a district court judge. Ivey did not commit fraud, Judge Noel Hillman for the U.S. District of New Jersey wrote in an opinion on this week.
To those who have never burned money at a baccarat table, its rules may seem arcane. At its core, though, baccarat is a game of random chance.
In short: A croupier deals himself or herself a pair of cards, and another pair of cards to a player. The cards in hand are added together — face cards and 10s are worth zero, while aces have a value of one — with the twist that only the last digit of the sum matters. A hand of an eight and a six, for example, would be worth four points. Unlike blackjack, a player cannot ask for a third card. An additional card is automatically dealt to a hand of five or fewer points. There are a few ways to bet, though whoever gets closest to a value of nine, the highest possible score, usually wins.
Its simplicity caught on among the tuxedo and cocktail dress crowd — Frank Sinatra was captured on camera dealing a hand at the Sands Hotel in 1959 — and it received the silver-screen treatment when Sean Connery debuted as James Bond in 1962’s Dr. No. It has remained popular, with baccarat games generating 91 per cent of casino income in gambling mecca Macau in 2014.
Given the opportunity to make massive amounts of money, casinos can be unusually accommodating to wealthy baccarat players. Ivey was able to use this to his advantage. In each of his visits to the Borgata, the casino accepted the same five requests. Ivey asked: that he play in a private area; that the dealer speak Mandarin Chinese; that he play with eight decks of purple Gemaco Borgata playing cards shuffled together; that the decks be shuffled with an automatic shuffler; and that Ivey would be allowed one guest at the table, a woman named Cheng Yin Sun.
Sun had spent, according to the New York Times Magazine, hundreds of hours memorizing tiny flaws in purple Gemaco Borgata playing cards. As she told the magazine in June, her motivation was not out of overwhelming loss — Sun claimed to have blown $20 million inherited from her father — but from time spent in jail for failing to repay a debt to an MGM casino.
The technique Ivey and Sun used was called edge-sorting. Sun was allowed to peek at the card before the dealer flipped it over. In Mandarin, she would ask the dealer to rotate the most valuable cards in the baccarat deck — the sixes through nines — 180 degrees as they were flipped. The automatic shuffler could randomize the cards, but would not alter their rotation.
“Baccarat is a casino game wellknown for unique and superstitious rituals,” Hillman noted in an October opinion. “Thus, Sun telling the dealer to turn a card in a certain way did not raise any red flags for Borgata.”
With the deck sorted, it was possible for Sun to identify which cards had been rotated. The pair therefore knew the values of the cards while they were being dealt, before completing bets.
It wasn’t fraud, however, because they did not break the rules of baccarat, Hillman wrote in his December opinion. Those rules “do not prohibit a player from manipulating the cards.” Nor were they obligated, as the casino claimed, to explain why they wanted the dealer to behave in a certain way.
Instead, the judge ruled Ivey and a partner did break the rules of New Jersey’s Casino Control Act and thus “breached their contract with Borgata.” In December, the judge ordered the pair to return US$10.1 million to Borgata, reflecting the baccarat cash as well as $500,000 won using some of the winnings at craps.
Ivey’s attorney, Ed Jacobs, emphasized that Hillman did not describe the poker player’s actions as fraud, and said Ivey will appeal the ruling.
As for the US$250,000 worth of comped goods and services that Borgata gave to Ivey and Sun, Hillman concluded that they did not owe the casino restitution. “Because the ‘comps’ were not tied to an obligation that Ivey win or lose, or do anything in particular except to visit Borgata,” he wrote, “Borgata is not entitled to the return of the value of those ‘comps’ as part of its breach of contract damages.”
BACCARAT IS A CASINO GAME WELL-KNOWN FOR UNIQUE AND SUPERSTITIOUS RITUALS.