Phillip Ivey v Genting Casinos UK Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Tomlinson,Lady Justice Sharp |
| Judgment Date | 03 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1093 |
| Docket Number | Case No: A2/2014/3507 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 November 2016 |
[2016] EWCA Civ 1093
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Mitting
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
Lord Justice Tomlinson
and
Lady Justice Sharp
Case No: A2/2014/3507
Richard Spearman QC and Max Mallin (instructed by Archerfield Partners LLP) for the Appellant
Christopher Pymont QC and Siward Atkins (instructed by Kingsley Napley LLP) for the Respondent
Hearing date: 13 April 2016.
Further submissions lodged: 9, 17 and 20 May 2016
Approved Judgment
Core issue: is edge-sorting legitimate play or cheating if used when playing Punto Banco?
The principal issue on this appeal is whether a method of play called "edge-sorting", which involves exploiting design irregularities on the backs of playing cards, results in cheating when playing Punto Banco, a variant of Baccarat. In Punto Banco, a single player plays against the casino or "house" offering the game. The appellant, Mr Philip Ivey (hereafter Mr Ivey), a well-known professional gambler from the United States, considers that it is lawful for skilful players such as him, known as "advantage players", to use methods of play such as this. He contends that edge-sorting ought to be known to the casino and the casino could protect itself against it. It follows that when he admittedly used edge-sorting he subjectively did not have any dishonest intention and his play cannot therefore have amounted to cheating. The respondent casino, known as Crockfords Club (hereafter "Crockfords"), say that they did not know about edge-sorting, and that it altered the odds against them unfairly.
Mitting J in a concise and carefully reasoned judgment held that Mr Ivey had been a truthful witness but that his play on this occasion amounted in law to cheating. This meant he had breached the terms on which Crockfords agreed to allow him to play: it was common ground that there was an implied term that Mr Ivey would not cheat. Accordingly the judge dismissed Mr Ivey's claim to recover his winnings, totalling £7.7.m. The appeal is against the judge's order dated 8 October 2014.
This is a most unusual claim. For much of our history, the keeping of gaming houses for the playing of games involving chance has been illegal and subsequently the making of gaming contracts was made illegal (see Gaming Act 1845, section 18). No doubt this explains why contracts arising from gambling rarely came before the courts. But in recent times there was a change of policy towards gambling. Parliament took the view that it was better in the modern world to permit places where people could game provided it was properly regulated. It permitted the enforcement of gambling debts. It set up the Gambling Commission. Among its functions the Gambling Commission grants licences to casinos. These reforms were implemented by the Gambling Act 2005 ("the 2005 Act"). Section 42 of this Act criminalises cheating in gaming generally. I have set out section 42 in the annex to this judgment.
It should not be thought, however, that the courts have never had to consider the meaning of cheating in relation to card games. We have received some assistance by the citation of some old authorities, and Scottish and Commonwealth authorities. But none of these cases was concerned with advantage play as such.
I propose to adopt the judge's description of the game, related concepts and edge-sorting. The facts are not in dispute and are set out by the judge, and so I can take the events leading to this claim shortly. I will then move to the parties' submissions and to my conclusions.
Punto Banco and the meaning of edge-sorting
Mitting J helpfully described Punto Banco and edge-sorting as follows:
4. Punto Banco is a variant of Baccarat. It is not normally, to any extent, a game of skill. Eight decks or, in English nomenclature, packs, sometimes six, of 52 cards are dealt from a shoe [card holder used by the dealer], face down by a croupier. She deals the cards in a sequence from which no deviation is permitted to two positions on the table in front of her, marked 'player', the 'Punto' in the name, and 'Banker', 'Banco': one card to player, one to banker; a second to player and a second to banker. In prescribed circumstances she must deal one further card, either to player or to banker or to both.
5 The basic object of the game is to achieve, on one of the two positions, a combination of two or three cards which, when added together, is nearer to nine in total than the combination on the other position. Aces to 9 count at face value, 10 to King inclusive count as nothing. Any pair or trio of cards adding up to more than 10 requires 10 to be deducted before arriving at the counting total. Thus 4 plus 5 equals 9, but 6 plus 5 (which equals 11) equals only 1.
6 Punters bet before any card is dealt and can bet on player or banker. Winning bets are paid at evens on player, and at 19 to 20 on banker. It is possible to bet on a tie. In the event of a tie, all bets on player or banker are annulled, in other words, the punter keeps his stake and the only bet paid out on is the tie at odds set by the casino of either eight to one or, at Crockfords, nine to one. It is possible to place other types of bet, but this case does not concern them and it is unnecessary for me to describe them.
7 The house edge in Punto Banco is 1.24% if player wins and 1.06% if banker wins. The counter intuitive difference is accounted for by the different rules which apply to drawing a third card for player or banker. The play of each sequence of two or three pairs of cards is known as a 'coup'.
8 Before play begins, the cards are cut to eliminate a proportion of the shoe from those to be played. The cut is effected by placing a blank divider between the bulk of the shoe and the remaining cards. Traditionally, seven cards out of 416 were cut from the shoe, but some casinos routinely eliminate more, typically about one deck of 52 cards. The croupier can deal a fresh shoe of cards as each is exhausted, or, after reshuffling, reuse the same cards.
9 The claimant aided by another professional gambler, Cheung Yin Sun (Ms Sun), played 15 shoes of Punto Banco at Crockfords Club in Mayfair on the afternoon and night of 20 to 21 August 2012 and on the afternoon of 21 August. He won just over £7.7 million. There is no dispute about the means which he used to achieve that win, a technique known as 'edge-sorting'.
10 A deck of 52 playing cards is manufactured so as to present a uniform appearance on the back and a unique appearance on the face. The backs of some cards are, however, not exactly uniform. The backs of many packs of cards for social use have an obvious top and bottom, for example, the manufacturer's name may be printed once only, or the pattern may be obviously the right way up and upside down. In casino games in which the orientation of the back of the card may matter, cards which are in principle indistinguishable whichever way up they are when presented in a shoe are used. Cards with no pattern and no edge present no problem, they are indistinguishable. However many cards used in casinos are patterned. If the pattern is precisely symmetrical the effect is the same as if the card is plain: the back of one card is indistinguishable from any other. But if the pattern is not precisely symmetrical it may be possible to distinguish between cards by examining the backs.
11 'Edge-sorting' is possible when the manufacturing process causes tiny differences to appear on the edges of the cards so that for example, the edge of one long side is marginally different from the edge of the other. Some cards printed by Angel Co. Ltd for the Genting Group (which owns Crockfords) have this characteristic. The machine which cuts the card leaves very slightly more of a pattern, a white circle broken by two curved lines, visible on one long edge than on the other. The manufacturers assert that this is not a defect but is within a contractually specified tolerance of up to 0.3 millimetres. Before a card is dealt from a shoe, it sits face down at the bottom of the shoe, displaying one of its two long edges. It is possible for a sharp-eyed person sitting close to the shoe to see which long edge it is. The information thus gained is only useful to the punter if he knows or has a good idea of what the card is.
12 In Punto Banco cards with a face value of 7, 8 and 9 are high value cards. If one such card is dealt to player or to banker, it will give that position a better chance of winning than the other. Thus a punter who knows that when the first card dealt, always to player is a 7, 8 or 9, he will know that it is more likely than not that player will win. If he knows that the card is not a 7, 8 or 9, he will know that it is more likely than not that banker will win. Such knowledge, it is agreed, will give the punter a long-term edge of about 6.5% over the house if played perfectly accurately.
13 According to Dr Jacobson, a former Professor of Mathematics, currently an expert adviser to the gambling industry, the house edge on any particular coup varies and is not precisely the long-term edge thus described. It may be between 4.5% and 7%, using the edge-sorting technique which I have described. I accept his evidence.
14 Three conditions must occur before the punter can gain that knowledge:
(1) the same shoe of cards must be used more than once;
(2) cards with a face value of 7, 8 or 9 must be turned through 180 degrees by...
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