Phil Ivey Has 50-60% Of Winning $10 Million Third Circuit Appeal, Appellate Lawyer Says

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Phil Ivey is holding a pocket pair against Borgata’s ace-king.

The poker legend has surprisingly good odds to see the $10.1 mm judgment handed down against him in late 2016 overturned by the U.S. Court of Appeals for the Third Circuit. According to Raffi Melkonian, a prominent appellate lawyer at Wright, Close & Barger LLP, in Houston, Texas, the poker legend has about a 50-60% chance of winning the appeal that pits him against MGM Resorts’ Borgata casino in Atlantic City.

“I would give this better-than-average chances of getting reversed,” Melkonian told US Bets/NJOG. “I think he has a pretty good shot at winning.”

Melkonian says it’s effectively a coin toss whether Ivey can get the Borgata off his back for good. The casino is trying to go after Ivey’s assets while the appeal is pending. According to Melkonian, a ruling from the Third Circuit, located in Philadelphia, should come in 8-12 months, putting the resolution to the years-long saga somewhere between this November and March 2020.

Appeal likely hinges on the meaning of ‘marking’ cards

In October 2016, U.S. District Court Judge Noel Hillman concluded that Ivey, as well as his infamous playing partner Cheung Yin “Kelly” Sun, did not commit fraud against the casino, but he did find that the gamblers breached a contract with the Borgata, based on the idea that they cheated at gambling under New Jersey’s Casino Control Act.

Hillman ruled that Ivey and Sun had to return their winnings, effectively returning both parties to their financial positions prior to the string of high-stakes baccarat sessions in 2012.

But did they really cheat? The Third Circuit will determine if that was the case, according to Melkonian.

“That’s the really interesting issue on appeal,” Melkonian said. “If you don’t manipulate the cards, would that be marking the cards? Or is it more like card counting [at blackjack]? Most courts say card counting is fine. The casinos can kick you out, but you aren’t breaking the state’s gambling laws.”

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Ivey and Sun’s scheme involved exploiting subtle manufacturing defects in the design on the backs of the playing cards (the card-maker was effectively absolved of all responsibility in the case). The technique, called “edge sorting,” gave the gamblers a small but statistically significant advantage in the game. The Borgata let them bet up to $100k a hand.

In order to edge sort, Ivey and Sun needed the Borgata to grant unusual requests. They needed the dealer to turn the cards a specific way, and they also needed the casino to use an automatic shuffler. Ivey and Sun never put their fingers on the cards.

Borgata argued that the turning of the cards, which it allowed only to get Ivey’s business during a time of prolonged stagnation for the Atlantic City gaming market, to be “marking,” and it also argued that the casino’s own automatic shuffler was a “cheating device.” The act of “marking” isn’t defined under the state’s casino law, but the “use” and “possession” of “marked” cards is, Judge Hillman concluded.

“I see where the [District Court] judge got to on the ‘marking’ conclusion. The opinion wasn’t beyond the pale,” Melkonian said. “The judges on the appellate court are going think about the ‘marking’ starting over.”

Most, if not all, serious gamblers would hate being labeled a card counter, but for Ivey and Sun, they are praying that the Third Circuit effectively calls them card counters.

Pick 3

Even with a legitimate case for the appellate court overturning the lower court’s ruling, Ivey and Sun’s fate could be determined by which three judges they get, according to Melkonian.

There are 13 active judges on the Third Circuit. Which ones are bad for Ivey and which ones are good for his appeal is anyone’s guess, but it sure makes for a sick sweat for Ivey’s camp.

In very rare cases, a ruling from the panel of three will be brought before the larger group. Melkonian said it’s very unlikely the Third Circuit would do that and then go against what the three-judge panel decides. It’s even less likely that Ivey’s case could make its way to the U.S. Supreme Court.

“In general, the chances of getting a case to the Supreme Court are about 1%,” Melkonian said. “This case is probably in that range. There are not a bunch of edge-sorting cases in the courts around the country where the appellate courts disagree.”

Borgata’s cross-appeal

The Borgata itself is contesting the 2016 judgment, in an effort to win more from Ivey based on its previously failed claims of fraud. Melkonian sees it as highly unlikely that Borgata will emerge from the Third Circuit with a ruling that awards it more money.

“The cross-appeal is about the judge dismissing their fraud claims. I think that has a low chance of success,” Melkonian said. “I don’t think they have a good chance of proving fraud here. The best argument they have is when they asked him why he wanted all the accommodations. He said, ‘oh, I’m just superstitious.’ The casino said that was a lie, but the reason that it is definitely not fraud is because there has to be an expectation that the other side believes you. A casino shouldn’t be believing what gamblers are telling them. It’s silly to say they were tricked.”

Borgata is seeking to have the damages trebled to more than $30 mm.

Ivey assets

After failing to locate any assets from Ivey in the state of New Jersey (the bank accounts came up empty), Borgata was able to convince the District Court to docket the $10.1 mm judgment in the state of Nevada. That action happened in early February, but it might not do any good for MGM.

“It looks like he has moved his assets out of the country,” Melkonian said, “and there is not much the Borgata can do about that.”

Borgata is desperate. Judge Hillman noted in his 2016 ruling that Borgata agreed to wire Ivey’s front money and winnings to a bank account in Mexico, so MGM has long known that the money left the United States. Still, it sought court approval to comb Ivey’s domestic bank accounts.

Following the judgment, Ivey’s legal team asked that he not have to put up a bond in the amount of the judgment while the appeal is pending. He said he couldn’t afford to. Judge Hillman didn’t believe the Poker Hall of Famer, and he granted Borgata’s request to begin trying to collect.

Lawyers for Ivey said in a motion filed in late July that the judgment would “be of devastating impact” to Ivey’s bankroll and career as a poker player. Ultimately, it looks like Ivey will be able to avoid putting up the money while the Third Circuit considers the case.

Impact of an Ivey victory

In terms of public sentiment, Ivey has long been the clear winner in the case. A Third Circuit win by the 10-time World Series of Poker bracelet winner would, more than likely, be widely applauded in the poker and advantage player communities. It could also do wonders to rejuvenating his historic poker career.

Ivey drastically scaled back his tournament poker play in Las Vegas in recent years, a move that would jive with the notion that Ivey moved his assets out of the country. He has rarely played at the WSOP in the aftermath of the late 2016 judgment. He’s cashed just four times at the world’s preeminent poker festival since the judgment was handed down, all of which came last summer.

The 42-year-old is still the most prominent poker player in the world, and it wasn’t long ago when he indicated that he wanted to end his career with the most bracelets in history (Phil Hellmuth currently leads with 15). A Third Circuit win could prove significant to his poker legacy.

Last month, MGM’s Aria casino in Las Vegas decided to remove Ivey’s name from a section of its poker room. It wasn’t a surprise move given the bitter legal battle

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Brian Pempus

Brian served as a senior reporter and online content manager for Card Player Magazine for nearly a decade before joining USBets in October 2018. He is currently focused on legal and regulated sports betting and online gaming. He's an avid jiu-jitsu practitioner in his free time.

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