Borgata Wins Partial Judgment in Phil Ivey ‘Edge Sorting’ Casino Case

Atlantic City’s Borgata Hotel Casino & Spa has come out on the winning end of a years-long civil lawsuit against world-famed gambler and poker player Phil Ivey after a federal-court judge in Camdem released a split-decision ruling that nonetheless gives the Borgata the right to collect a dispute $9.626 million from Ivey and a co-defendant, Cheung Yin Sun.

Ivey and Sun were sued by the Borgata’s prent company, Marina District Development Co., LLC, in 2014 over allegations that the pair had broken New Jersey gaming laws and committed fraud against the casino.  The Borgata alleged that the pair had employed a complex “edge sorting” scheme that relied on several intertwined, complex ruses, and which depended in part on Sun’s acute, trained eyesight, to garner a significant probabilistic edge at the casino’s high-roller mini-baccarat tables.

The ruse, employed by the pair, allowed Ivey (the well-known gambling “whale” whose business was sought by the casino and who was the “official” bettor in the scheme, to make the profit of $9.626 million over four extended baccarat sessions over several months in 2012.  The ruse involved the granting by the casino of several factor which the casino successfully claimed to have offered to Ivey in all innocence of their subsequent use in the edge-sorting ploy by Ivey and Sun.

The pair of high-stakes gamblers admitted to the ploy during the case’s testimony, but vehemently denied that it was a form of cheating.  Nonetheless, the Borgata claimed that Ivey was up by at least $2 million more during the October 2012 session, the final of the four visits by Ivey and Sun to the casino, and intentionally lost back that extra $2 million as “cover play.”  That last session at the Borgata occurred as news of a similar mini-baccarat dispute (and eventual lawsuit) emerged involving Ivey, Sun, and London’s Crockfords Casino.

As in the initial Crockfords case ruling, noting that it is still under appeal, the casino claimed the upper legal hand.  A similar outcome occurred in the ruling by US District Court Judge Noel J. Hillman in recent days.  Hillman ruled that Ivey and Sun violated New Jersey’s gaming laws, which proscribe fixed odds for certain games that are legally offered by casinos within New Jersey.

The complicated ruse engineered by Ivey and Sun is estimated to have shifted the game to as much as a 16% edge against the house in Ivey’s favor; the longer they played, the greater that edge became.  The ruse involved the casino being required to supply a Mandarin-speaking dealer, who then was instructed to rotate highly-favorable baccarat cards 180 degrees, after being declared “lucky” in Mandarin by Sun.  “Unlucky” cards were not rotated, and all cards were shuffled, per Ivey’s demands, by a machine shuffler which did not otherwise change the cards’ orientation.  Sun was then, with her trained eyesight, able to identify the likely value of the top card in the shoe at the start of each baccarat hand due to subtle print variations in the cards’ patterns.

In his ruling, Hillman ignored the widespread allegations that the Borgata either ignored the blatant giveaways that Ivey’s and Sun’s scheme was in progress, or were otherwise so negligent and ignorant of the alleged cheating scheme that they deserved to lose anyway.  However, Hillman ruled in favor of the casino on its claims that Ivey breached both its implied “fair play” contract with the casino to adhere to the rules of the game, and in the process violated New Jersey’s Casino Control Act (CCA) as well.

Hillman, however, ruled in favor of Ivey and Sun on additional claims of fraud and unjust RICO (racketeering crime) enrichment, which would have entitled the Borgata to claim multiples of damages.  The ruling’ purpose seems clear: to allow the casino recoup losses the judge decalred came from unfair play, but not for the casino to additionally enrich itself beyond the scope of those losses.

It is not yet known if Ivey and Sun plan to appeal the decision, the full details of which are yet to be published.  Ivey and Sun are likely to be held jointly and severally liable in the matter, meaning the casino can attempt to collect from either or both, though Phil
Ivey is the likeliest legal target, should he eventually suffer a final loss in the case and if sufficient assets are identified.  Separate claims made by the Borgata against a third co-defendant in the case, Kansas City-based card manufacturer Gemaco, remain contested at this time.