Pro Gambler Phil Ivey Ordered to Repay $10.13M to Borgata

In what is likely the largest successful “clawback” lawsuit in New Jersey gambling history, a US District Court judge has ordered professional gambler Phil Ivey to return $10.13 million in illicitly obtained winnings to Atlantic City’s Borgata Hotel Casino & Spa.  The decision also likely sets an outer legal boundary on the types of advantage play by gamblers that will be tolerated at New Jersey-licensed casinos.

According to the ruling on damages signed by presiding US District Judge Noel L. Hillman on December 15th, the Borgata is entitled to collect $10.13 million in damages from Ivey, the official gambler of record during four visits to the Borgata by the globally-famous high roller in 2012.  Ivey, perhaps most famed as a professional poker player who has won 10 World Series of Poker (WSOP) event bracelets, is also known as an enthusiastic bettor in the pits in casinos around the globe, though those activities will certainly draw increased casino security after two prominent lawsuits involving alleged “long con” activities in casinos.

As with a similar lawsuit involving Ivey in England and as previously covered here at NJCasinos.org, the Borgata lawsuit involved his play at high-stakes mini-baccarat, a form of baccarat in which the player never touches the cards and can choose to bet on either the “dealer” or “player” positions.  (A bettor can also wager on a push, but it’s such a sucker bet no one ever does.)  Ivey, with the assistance of an eagle-eyed companion, co-defendant Kelly Sun, executed a complex scheme in which the single shoe of cards in use at his table ultimately became sorted in a way that allowed Sun, who played the role of Ivey’s social companion, to identify the first card in each hand with increasing accuracy.

Armed with the first-card knowledge, in a method known as edge sorting, Ivey was able to win $9.626 million over four separate visits to the Borgata in 2012, before the scheme was exposed.  In the decision, Judge Hillman ordered Ivey to repay those winnings in full, along with an additional $504,000 Ivey won at craps during one of those visits, funds that he simply moved over to the craps table from his growing profits at mini-baccarat.

For all that, and despite its probable stance as the largest legal decision of its type in New Jersey, it could have been worse.  Hillman ruled against the Borgata in its assertions that its actual damages were well over $15 million.  That higher number included $249,000 in casino comps extended to Ivey and Sun during the pair’s four 2012 visits to Atlantic City.  Those alleged damaged were denied by Judge Hillman on the basis that they were not necessarily tied to Ivey’s illicit mini-baccarat play, which was ruled to have breached an implied contract between Ivey and the Borg by changing the known odds of the game.  The difference between the changing of the odds as perpetrated by Ivey and Sun in their scheme and the changing of odds by card counters in blackjack (legal under NJ gambling law), is that mini-baccarat is supposed to be a skill-free game, in that player actions cannot affect a hand’s outcome.

Hillman also ruled that the Borgata was not entitled to another $5.5 million in “expectation damages,” which the casino’s attorneys alleged the Borg would have won had Ivey’s play occurred under the game’s normal odds, assuming the same number hands had been played.  Judge Hillman ruled that part of the claim of damages to be too speculative.  It’s highly unlikely that Ivey would have played the more than 1,800 hands of mini-baccarat at stakes up to 100,000 per hand had the self-described “advantage player” not had the secret edge.

However, the decision not to award the expectation damages to the Borgata also leaves them on the hook for the labor and facilities expense wasted in catering to Ivey’s lavish requests.  That’s probably the fairest outcome, after all; since edge sorting has been known in the gambling world for decades, there’s always been the whiff around the edges of this case — uttered rather more openly in gambling circles and discussion forums — that the Borg played the innocent fool, perhaps even indeed freerolling Ivey and his suspicious gambling requests.

Two wrongs don’t make a right, anyhow, and Hillman’s ruling in essence nullifies all the gambling action that occurred between Ivey and the Borg.  It remains to be seen how easily the Borgata can repatriate the adjudged damages from Ivey, co-defendant Sun, or even Sun’s backer in the scheme, a prominent Atlanta-area sports bettor named in court documents.  There’s even the possibility that further legal action could develop between the Borgata and the maker of the cards exploited in Ivey’s scheme, Gemaco.  Gemaco was named a co-defendant in the Borgata lawsuit, on separate allegations, but that portion of the case was dismissed — though it could be reopened based on what happens with the collection of damages from Ivey.