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14 April 2014
By Aaron Todd
Last week we learned that the Borgata Hotel Casino and Spa is suing Phil Ivey for $9.6 million, the amount he won from the casino playing baccarat in 2012. Unfortunately, many journalists (or at the very least, headline writers) have characterized Ivey's play as "cheating."
For a detailed explanation of how Ivey was able to gain an advantage over the house, give John Brennan's story from NorthJersey.com a read.
I'm not a lawyer, so I won't make a prediction about what will actually happen in this case. But I know what should happen: Ivey should keep the money, and the Borgata should sue only Gemaco (the manufacturer of the playing cards that made Ivey's advantage play possible), or take its medicine and learn a $9.6 million lesson.
Here are the top-10 reasons I believe it's incorrect to say Ivey "cheated" at the Borgata.
10. Casinos are responsible for keeping information from the players
If a blackjack dealer unintentionally reveals that the first card off the shoe for the next hand is an ace and bets are still open, is it cheating for the player at first base to increase his bet? The player is using information that the casino didn't protect and is betting accordingly. That's not cheating.
Similarly, if a player learns that a roulette wheel is biased and uses that information to profit, is the player cheating? In this case, the casino didn't ensure that the equipment was perfect.
In Ivey's case, the Borgata was using imperfect equipment, and he was able to get the casino to provide him with enough information to get an edge on the game. That's not cheating, in my mind. That's a case of ineffectual game management on the part of the casino.
9. The casino used faulty cards
Should Ivey be blamed because the casino's quality control failed to recognize that the cards they used were faulty? If the Borgata wants to sue Gemaco, I'm all for it.
The casino does everything it can to squeeze every bit of a house edge from its players, and then sues players for doing the same to the casino? Sounds a bit hypocritical to me.
8. Ivey didn't mark the cards
If Ivey had physically marked the cards, that would be cheating. But instead, his companion, Cheng Yin Sun, merely asked the dealer to turn the cards in one direction or another, which made the cards identifiable. Since the cards themselves were unaltered, I don't believe this is cheating.
7. The dealer didn't have to comply with the request
This is the key distinction. The dealer didn't have to comply with Sun's request; or perhaps more importantly, the floor should have told the dealer not to comply.
6. An automatic card shuffler is not a "cheating device"
The most ridiculous claim in the Borgata lawsuit is that Ivey and Sun used the automatic card shuffler as a "cheating device." According to New Jersey gaming law, a cheating device is "a computerized, electronic, electrical or mechanical device which is designed, constructed, or programmed specifically for use in obtaining an advantage at playing any game in a licensed casino or simulcasting facility."
A card shuffler is used to shuffle cards. It is not designed for use in obtaining an advantage. Just because the dealer and/or the floor didn't give the cards a wash before putting them into the machine doesn't make it a cheating device.
5. "Misrepresenting motive" isn't cheating
Ivey's reasoning for all the terms he laid out was that he was superstitious. I'm superstitious, too, in that I believe that when I play games with a house edge, I'm likely to lose and when I play games where I have an edge, I'm more likely to win. Saying he was superstitious to gain an edge in a casino game doesn't make what he was doing illegal. He wasn't in front of a grand jury; lying to casino executives may break one of the Ten Commandments, but it's not against the law unless you're under oath.
4. Fool me once, shame on you; fool me four times, shame on me
The part of this story that I find most incredible is that not only did the Borgata allow Ivey to set his own terms once, but after he took the casino for $2.4 million the first time around, they let him return under the same terms three more times. They even let him increase his maximum bet from $50,000 per hand to $100,000 per hand. The Borgata could learn a thing or two from George W. Bush.
3. He was still gambling
The Borgata's lawsuit against Ivey claims that "Ivey and Sun succeeded in manipulating the Baccarat game to deprive the game of its essential element of chance." But according to that same lawsuit, Ivey succeeded only in flipping the house odds from 1.06 percent in the house's favor to 6.765 percent in his favor.
Obviously, playing a game with an expected return of 106.765 percent is a great deal for the player. But it's not a guarantee that he will win. I can find plenty of bets in a casino that have a much higher edge than 6.765 in favor of the house. If those games are considered games of chance, one with the same odds in favor of the player should also be considered a game of chance.
Yes, rigging a slot machine to ensure a jackpot payout on the next spin isn't gambling. But betting $100,000 when you only have a 6.765 percent edge is still gambling in my book.
2. If Ivey had lost money, would the casino still be suing?
Given the length of the sessions and the number of hands Ivey was playing each time, it's highly unlikely, but still possible, that Ivey could have ended up losing money, even with a theoretical 6.765 percent edge. If he had lost money, would the Borgata be suing over the difference that they believed they should have won? Who is to say that Ivey wouldn't have won a little bit anyway? What are the actual damages? It's nearly impossible to compute.
1. The Borgata agreed to Ivey's terms
This is the only argument that matters, in my mind. The Borgata agreed to Ivey's terms. The casino is always in charge; they run the game. If it decides to run the game in such a way that a sharp player is able to take advantage, that's its own fault.
Lick your wounds, take your medicine and don't do it again, Borgata. Even if you manage to win due to some legal technicality, this is going to kill your reputation.
As gambling law expert I. Nelson Rose said in a separate casino/player dispute in New Jersey, "it's a contract; it's a binding contract and they have to pay off. And if they don't pay off, let's say for some technicality, then they're going to get a reputation that they don't pay off. You not only have to beat them in a game of chance, you also have to beat them in court. And that's not a smart way to market your casino."
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