In the first case since the coming into force of the Gambling Act 2005, the English courts have determined whether the conduct of a party to a gambling contract amounted to cheating for the purposes of civil law.

The case in question was Phillip Ivey v Genting Casinos UK Ltd (t/a Crockfords Club) [2014] EWHC 3394 (QB).The claimant in the action, Phil Ivey, is a very well-known American professional gambler. He sued the defendant casino for winnings of £7.7million. In a game of Punto Banco, Mr Ivey used the technique known as ‘edge sorting’, which enabled him to notice tiny differences on the edges of the playing cards to give him an advantage over the casino.

During his playing of Punto Banco at the casino, Mr Ivey put much emphasis on his superstitions. In doing so he persuaded an innocent croupier to use a particular pack of cards, and instructed her to turn the ‘lucky cards’ 180 degrees. In doing so Mr Ivey was able to use the edge sorting technique to obtain an advantage over the casino which allowed him to make substantial winnings. Following examination of the casino’s recordings of the play, the casino refused to pay Mr Ivey his winnings and refunded him his original stake of £1 million.

The casino denied that they were liable to pay Mr Ivey his winnings based on three defences:

  1. No game of Punto Banco had been played, because the normal rules of the game dictate that the cards are dealt at random;
  2. There was an implied term that Mr Ivey would not cheat and that term had been broken; and
  3. Mr Ivey had committed a criminal offence of cheating under section 42 of the Gambling Act 2005, by interfering with the game, or deceiving the croupier, and so was not entitled to his claim on account of his own criminal conduct.

It was accepted that, if Phil Ivey had cheated, he was not entitled to his winnings.  However, Mr Ivey denied he had cheated and asserted that what he had done amounted to “legitimate gamesmanship” and was lawful. Mr Ivey’s counsel put to the court that edge-sorting involved nothing more than using information that was available to any player simply from viewing the backs of the cards that the casino chose to use and making requests of the casino, which it could accept or refuse, as to the manner in which play was conducted.

On the first limb of the defence, the courts held that there was no doubt that a game of Punto Banco had been played according to its rules, except the odds of the game in this instance had been switched to favour Mr Ivey.

On to the second limb of the casino’s defence, it was common ground that if Mr Ivey had cheated then he would not be entitled to his winnings. What the court had to determine was whether Mr Ivey’s actions in duping the unsuspecting croupier into turning the cards, so as to allow him to know what they were or were very likely to be, was cheating for the purposes of civil law.  This case was the first in which an English court had to determine whether the conduct of a party to a gaming contract could amount to cheating for the purposes of civil law.  Section 18 of the Gaming Act 1845, before being repealed by the Gambling Act 2005, had previously made all gaming contracts or agreements null and void, meaning no action could be brought on whether a party to a gaming contract had cheated.

The judge noted that, as far as the civil law is concerned, there is no general agreement as to what the industry standard of what is to be cheating or not cheating.  The fact that Phil Ivey (and his expert witness) was genuinely convinced that he did not cheat was not determinative.

The court concluded that My Ivey had given himself an advantage by using the croupier as an innocent agent, and was not simply taking advantage of an error or anomaly for which he was not responsible. He knew that the croupier had no idea of the consequences of her actions, at his instigation, and Mr Ivey therefore converted the game so as to have unlawfully have obtained an upper hand over the house.  For these reasons, the court held that Phil Ivey’s actions did amount to cheating for the purposes of civil law and dismissed his claim, denying him his winnings.

Given that conclusion, the court did not see it necessary to continue to consider the third limb of the casino’s defence under criminal law.