Absent an outlier situation, casinos have a mathematical edge over their customers. Almost everyone that enters a casino understands this.  The law accepts the fact that customers cannot win over the long run. To increase the house edge, casinos entice customers with a steady flow of cocktail waitresses who hand out complimentary drinks—this is smart business because the house edge increases as players become intoxicated. But what happens if a customer is able to gain an advantage over the casino due to the casinos own fault or negligence? Suddenly, the law is much less accepting.

Phil Ivey, one of the greatest cash game poker players in the world, won 9.6 million dollars playing baccarat at the Borgata in Atlantic City, New Jersey. Ivey won by utilizing edge-sorting, a technique where a player determines whether a face-down playing card is likely to be low or high by observing and exploiting subtle unintentional differences on the backs of certain types of cards. The edge sorting technique can change the odds of baccarat from 1.06% in the casinos favor to around 6% in the player’s favor. The Borgata’s card supplier, Gemaco, manufactuered cards that had slight pattern variations on the back of the cards. Ivey and his partner were able to identify a card’s value when the card was faced down by remembering the varying pattern on the back of the card. The cards that were used in the game had been approved for use by New Jersey’s casino regulators, and the cards passed the Borgata’s inspection.

The Borgata filed a lawsuit against Ivey seeking return of the 9.6 million-dollars in winnings. The casino alleged that under the New Jersey Casino Control Act, Ivey committed fraud by cheating. Ivey claimed he used skill to gain an advantage by exploiting mistakes the Borgata made. The Borgata controlled the game and could have stopped the game upon spotting the same card defects that Ivey was seeing. A federal judge denied Ivey’s motion to dismiss even though the judge was sympathetic to Ivey’s skill argument. The judge said the matter should go to a jury.

In Britian’s High Court, Ivey lost a suit to a London based casino after Ivey won 12.4 million dollars using the edge sorting technique. The Borgata v. Ivey case raises the question whether a double standard exists in the law—does the law allow a casino to have an edge but not the customer even if the casino is responsible for allowing the customer to gain the edge? Also, what constitutes skill versus “cheating”? If the case goes to trial,  it will be interesting to see how a jury answers these questions.

— Forrest James



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One Response to Skill or Cheating—What Happens When a Player Exploits a Casino’s Mistake?

  1. Kevin Cavino says:

    I do not see how that is cheating at all really. Sounds like the casino should sue their card manufacturer for making a terrible product which tips off players smart enough to pick up on the intricacies in the design.