Ivey-Borgata $10M Saga Reaches Court Of Appeals — And Gets Even More Confusing

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If you’re wondering why the $10 mm Phil Ivey vs. Borgata saga has reached the U.S. Third Circuit Court of Appeals, rather than being decided by state regulators — well, you have an ally in Third Circuit Judge Marjorie Rendell, who expressed her frustration at the situation in a sometimes bewildering 45-minute oral argument session in a Philadelphia courtroom on Tuesday.

In the courtroom — the same one where the New Jersey horsemen tried to make their case against the NFL et al. in the sports betting legal spat earlier this year — attorneys for the legendary poker player and Atlantic City’s leading casino took on questions from a three-judge panel.

And after more than a year of legal wrangling about the millions that Ivey and a playing partner won from the casino playing mini-baccarat way back in 2012, it seemed clear during the hearing that a number of stones remain unturned.

The Third Circuit judges invited the state Casino Control Commission and the Division of Gaming Enforcement back in August to submit “amicus” — or “friend of the court” — briefs to clarify whether the “edge sorting” technique used by Ivey and partner Cheng-Yin Sun violated the state Casino Control Act.

That might have made the judges’ lives easier. But in letters dated Sept. 6, both agencies said they could not.

State agencies say hands are tied

Dianna Fauntleroy, chief counsel for the commission, noted that in 2011, much of the commission’s duties were transferred to the Division of Gaming Enforcement.

“Accordingly…. the Commission is without authority to assist the Court in determining whether the edge-sorting technique at issue in the pending appeals constitute a violation….” wrote Fauntleroy.

David Rebuck, the division’s director, wrote in his letter that the 2011 partial merger with the commission “did not vest exclusive primary jurisdiction with this agency.” Rebuck said that the New Jersey Legislature could have done so, but passed.

Rebuck added that the Division wouldn’t be able to “direct payment” such as sending Borgata its $10 mm back anyway — and that “a decision as to whether cheating occurred is a question of fact to be determined by a jury.”

“Courts should not refrain from hearing matters under the doctrine of primary jurisdiction that involve questions of fact for a jury or the awarding of civil damages,” Rebuck concluded in his letter.

Rendell wasn’t convinced, saying that “the commission should have spoken on this.”

Instead, Rendell noted, “They’re putting [the case]in our lap.”

After some discussion of a 2015 Golden Nugget legal tussle that might offer some semblance of precedent, it was noted by Borgata attorney Jonathan Massey that the opinion was unpublished.

“It’s all we’ve got,” said Rendell with a sigh.

Both sides fudged the rules

One new curiosity about the case was that it was established that Borgata and Ivey agreed to terms of play in 2012 that are illegal under state regulations unless approval for an exception is granted beforehand (and it appears that did not happen). So instead of 12 decks and two “shoes” with card backs of different colors, only eight decks, one shoe, and purple Gemaco cards were used during these four visits to Atlantic City.

Borgata officials clearly were eager to ensure that Ivey chose their casino for these visits — the last two of which had Ivey able to wager up to an incredible $100k per hand.

What does that mean for the dispute, if the play was at least technically illegal? Can Borgata gain a victory in court on grounds of Ivey and Sun illegally edge sorting in play that all was not kosher? That wasn’t cleared up on Tuesday.

Louis Barbone, Ivey’s attorney, stressed that during depositions, “Every Borgata official said that edge sorting is legal” while adding that Sun’s ability to spot the tiny imperfections on the backs of the playing cards required “extraordinary visual acuity.”

As questioning of Barbone and Massey went along, the issue of edge sorting — which in this case consisted of Sun instructing the dealers how to orient the cards in the deck in such a way as to give them “first card advantage” in the next shuffle — came to the fore.

In a surprise, Massey said that “Borgata had never heard of edge sorting” before this case.

“Any reasonable person would see that edge sorting is not permissible,” Massey said.

The judges wanted to know if edge sorting had been permitted in the agreement, and that became one of several issues that produced suggestions about whether to “remand” the case back to the U.S. District Court to clear up various confusion.

Massey said that it was common knowledge that baccarat is “glorified coin flipping” — a fact that might disappoint fans of early James Bond movies.

Borgata takes some hits

Rendell seemed to have little sympathy for Borgata’s side, saying that “Borgata is the one who agreed” to the terms of play that directly led to riches for Ivey and Sun.

“Nothing was hidden from you,” added Rendell, the ex-wife of former Pennsylvania Governor Ed Rendell who also was part of the three-judge panel whose sports betting ruling was overturned by the U.S. Supreme Court last year. “These cards weren’t marked — here you had equal access.”

But Massey pointed to sworn testimony of both Ivey and Sun that, well, of course they endeavored to make sure that casino employees didn’t figure out the scheme.

“Cheating may be clever — but it’s still cheating,” Massey said. “Edge sorting is antithetical to baccarat.”

Barbone highlighted the fact that the DGE investigated the issue back in 2012 and “did nothing.” Therefore, he said, there was no point in sending the case back there.

“It’s time for the court to do something,” Barbone said.

There is no wagering on the result in this case, either in the United Kingdom or Ireland.

But if there was, an underrated play would be seeing this case land in New Jersey Supreme Court as a state issue.

Judge Cheryl Ann Krause made a passing reference to that court, while later adding the usual, “We will take the case under advisement.”

The rest of the docket

While some of us see this case as remarkable enough to be the possible plot for a movie, in Third Circuit Court on Tuesday this was the last of the four cases heard.

The first had to do with whether a first-degree murder conviction should be upheld in spite of the fact that the jury asked questions of the judge during deliberations as to how they could successfully disregard a claim by a co-defendant about the murder. Just because they were ordered to ignore the claim, could a jury really do so?

The second had to do with denial of a disability claim, with Social Security having focused on the claimant’s education and skills and the attorney for the claimant pointing to her severe difficulty in interacting with people.

Then came a question as to whether restitution penalties for crimes — in this case, sex trafficking — can be assessed per count rather than as one payment. Fans of “the rule of lenity” would have enjoyed the discussion as a tuneup to the Ivey vs. Borgata debate.

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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