What Happens When the House Loses?

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If you follow me on Facebook you’ve read many of my tales of the poker table. I used to even write some of them for this blog. It was only six months ago I got to live the dream and play in the WSOP which got an extensive post here. I also spent a year of my life dealing cards in a casino, so when a gambling story gains enough traction it’s covered by mainstream media outlets, I feel a responsibility to answer some questions on it and provide what context I can. With that in mind, let’s talk about Phil Ivey, edge sorting, baccarat, and what happens when you take a casino to court.

If you were to make a list of the top poker players of today, Phil Ivey could easily hold the number one spot. He won his first WSOP bracelet at 23 and has won nine more since then. He has lifetime tournament winnings topping $23.4 million spread out over multiple varieties of poker. I tell you all of this not because this story has anything to do with poker but because you need to understand that Phil Ivey is a man who understands odds, cards, and gambling at a level few others on this planet do.[1]

This story actually has to do with a game called baccarat. This is one of the games that I was certified to deal when I worked for Prairie Meadows. There are only three things you really need to know about the game: the sixes through nines are extremely important, this is a game popular with high rollers, and because of that fact, this is a game with a great deal of superstition around it. To demonstrate that last point, please take a look at this:

Players will keep these cards to track the results of the various hands. Think of it like writing down the results of a roulette wheel to try to predict the next number, but with cards instead of a ball. I can assure you though, it’s equally as inaccurate. You could track one hundred flips of a single coin but that still won’t help you figure out if the next flip is heads or tails. Players take these cards quite seriously, and to give a personal anecdote, I watched a player track results for 8 decks worth of cards and then place a single thousand dollar bet. It takes around 45 minutes to an hour to deal through 8 decks, and through the rest of it the player would just sit and observe. He did this for the entire eight hour shift I worked that night and he was still going when I went home.

Phil Ivey, along with another woman, won $9.6 million over several months playing baccarat at the Borgata Casino in Atlantic City. A court just recently ordered them to give all the money back saying they cheated. How did they do it? The woman had identified a flaw in the design of a certain brand of trusted playing cards, they weren’t perfectly symmetrical. Phil Ivey had a reputation as a high roller in this casino known as a poker hot spot and was able to talk the casino into a baccarat game with several stipulations.[2] Again though, weird stipulations from high rollers with this game is not unusual.

One of them was to use this particular brand of playing card, another was that a shuffling machine be used, and the most important was that as the cards were being sorted that the sixes through nines be rotated 180 degrees compared to the rest of the deck. The shuffling machine is great at rearranging cards, but it doesn’t rotate them like a hand shuffle and wash would do. Owing to the flaw in the backs of the cards, this setup allowed the players advanced knowledge of where the key cards would appear before they were flipped over which allowed the pair to beat the house and walk out big winners. This technique has been dubbed ‘edge sorting’. A district court has ruled that this was fraud and that all the money is to be returned to the casino. If you want to read the judge’s opinion in full you can find it here. At least the judge did agree that the comped value of food and rooms doesn’t have to be repaid.

There are two other recent cases I’d like to compare to this one. The first happens to be from my former employer, Prairie Meadows in 2010. A man won a slots jackpot of $9,387. Winnings of that much demand a W-2 be issued, but upon getting the player’s information, it was revealed he’d been banned from the casino for vandalizing a machine several years prior. The casino denied the payout on the grounds that the man was trespassing, the man sued, and the court ruled that the casino was within their rights to withhold the jackpot.[3]

I’ve been trying for a while now, but can’t dig up a citation for this other story, so my apologies on this one. It was a British man sometime around 2008 who had voluntarily signed a self-trespass waiver for a casino. These are a last resort for some gamblers who have trouble breaking the addiction. The man violated the waiver, but wasn’t discovered by the casino. He lost a large sum of money then sued the casino for it back saying the casino should have noticed he was there and thrown him out. The court once again sided with the casino.

Please note, I am in no way a lawyer and I don’t even regularly play bar trivia with one anymore, but there is an obvious difference to me in these cases. In the last two, the player did something wrong that the casino didn’t agree to. Phil Ivey made his demands quite clear and the casino accepted the terms. They never touched or rearranged the cards themselves. They asked the casino, and given the amount of money at stake, it’s not like this was just a minimum wage dealer shrugging their shoulders. This went up several layers of management, had multiple sets of eyes on it, and they all gave it the OK. Ivey’s lawyer has said that the decision will be appealed and I hope another judge will agree that sitting down at a game as the favorite isn’t a right reserved only for the house.

 

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