The Borgata Hotel Casino & Spa has filed a federal civil lawsuit against famed poker pro Phil Ivey, alleging fraud and a handful of other torts were committed by Ivey and an alleged baccarat partner during four sessions of high-stakes baccarat play during 2012.

The lawsuit asks for a full refund of the collective $9.626 million that Ivey won at the Borgata’s tables, and, in one of the civil allegations, asks for trebled damages under civil racketeering (RICO) statutes.

Ivey and his partner, Cheng Yin Sun, amassed the nearly eight-digit win during a six-month span from April to October of 2012, using a card-identification technique called “edge sorting” to gain advance knowledge of what the top card in the eight-deck shoe being used was, before it was dealt into the game. The version of baccarat being played involved only two hands (dealer and one player), and allowed the bettor to choose either hand before the card were revealed.

Through the use of the edge-sorting technique, according to the Borgata, and in conjunction with a long series of contrivances that Ivey and his companion asserted were superstitions – but which the Borgata alleges were simply a complicated cover for fraudulent play – Ivey was able to swing the betting odds in the game in his favor.

According to the lawsuit, which includes an estimation of the game’s changed probabilities assuming Ivey’s and his partner’s ability to identify cards, the baccarat version being played shifted from having a 1.06% house advantage to a 6.765% edge in Ivey’s favor. The narrow initial house edge itself is unusually low compared to other casino games, and games with such nearly neutral odds are, typically, only offered to the highest bettors.

The lawsuit also names the manufacturer of the cards being used, Gemaco, and seeks the same amount of the casino’s loss to Ivey ($9.626 million), alleging that the decks being used were defective and violated the terms of the contract between Gemaco and the Borgata. A female supervisor of Gemaco, named only as a “Jane Doe” in the complaint, is also cited by the Borgata as being negligent of her quality-control duties in releasing the finished cards to the Borgata. Gemaco is based in Missouri, and is one of several cardmakers serving the casino industry.

How the Alleged Edge Sorting Occurred

Ivey and Sun, the latter a Las Vegas woman of Asian descent, first approached the Borgata about hosting Ivey and allow him to participate in private high-stakes baccarat sessions. The Borgata complaint does not list exactly when Ivey first contacted them, seeking special treatment and perquisites due to his perceived status as a “whale” (casino lingo for a gambler willing to bet often at very high stakes), stating only, “In about April 2012, Ivey contacted Borgata… .”

The numerous special arrangements, detailed below, were agreed upon between Ivey and the casino, after which Ivey played four lengthy sessions of baccarat at the Borgata. Sun accompanied Ivey during each of his four sessions at the Borgata tables. Those four sessions, and the amount Ivey won at each, were as follows:

April 11, 2012 – Ivey played for 16 hours, logging a win of $2,416,000.

May 3, 2012 (Ivey stayed for several days) – Ivey played for 56 hours, logging a win of $1,597,400.

July 26, 2012 – Ivey played for 17 hours, logging a win of $4,787,700.

October 7-8, 2012 – Ivey played for 18 hours, logging a win of $824,900 after being up by more than $3 million at one point. The Borgata complaint alleges that Ivey intentionally lost as much as $2.7 million back to the Borgata after being well ahead, the losses beginning exactly as public reports about his lawsuit against London’s Crockfords Casino over withheld winnings, at a slightly different version of baccarat, emerged. Eventually, Ivey admitted to a British tabloid that he had employed a similar “edge sorting” technique to gain an advantage in the disputed Crockfords session.

For the July and October sessions, Ivey asked for and received permission from the Borgata to increase his maximum bet from $50,000 to $100,000 per hand. And it’s that October session which may have the most to do with whether or not the Borgata ultimately prevails in its case. That’s not only due to what the Borgata claims were intentional losses by Ivey to cover the fraud, but because of the related emergence of the tale of Ivey’s own lawsuit against Crockfords in what the Borgata has asserted is a highly similar edge-sorting scheme.

Phil Ivey in London where he beat Crockfords Casino at Punto Blanco for $12 million

The Related Crockfords Story

That the Crockfords and Borgata tales involving Phil Ivey would quickly become intermingled was virtually a given, but only with the filing of the lawsuit by the Borgata do observers have the chance to see how strongly one led into the other.

On October 6, 2012, news broke that a similar large win by Ivey at Crockfords at punto banco (a baccarat variant) was being denied by the London casino pending an internal investigation. London’s Daily Mail reported that Ivey had played at Crockfords for two nights in August of 2012, amassing a very large win of £7.3 million – a bit less than US $12 million.

As in the Borgata visits, Ivey was accompanied by a “mysterious female Asian companion,” who continues to remain unidentified in British reports on the Crockfords lawsuit, but who may well have been Sun.

Whether the companion was Sun or not, the Daily Mail revealed that Sun had been 86’d from another Genting-owned casino, and that was part of the reason, according to the story, that Crockfords’ suspicions were aroused concerning Ivey’s win. The Borgata lawsuit, for the record, alleges that Ivey’s companion there, Sun, had previously been banned from multiple casinos.

Crockfords refused to pay Ivey his winnings. Ivey had wired money to the casino to play punto banco – a practice he also used to send a gambling bankroll to the Borgata – and Crockfords instead returned only Ivey’s initial stake of £1 million. Several more months of fruitless negotiations between legal representatives of Ivey and Crockfords passed before Ivey filed suit the following spring.

The news about Crockfords’ withholding of Ivey’s apparent win spread quickly following its October 6th publication, and according to the Borgata filing, they learned about it the following day, October 7th, just as Ivey planned to start play in his fourth and final Borgata session. Ivey had arrived on October 5th and claimed he was too tired to play, according to the Borgata complaint; Sun did not arrive until the following day.

Exactly what information the Borgata had about the possible “edge sorting” activity remains unclear, as the lawsuit does not indicate that Borgata staff communicated directly with Crockfords or Genting officials.

The Borgata complaint also asserts that Ivey was ahead by more than $3 million during his October 7-8 session, and that at some point, he intentionally lost most of those winnings back. The lawsuit does not go into specifics as to how this was done, but it states that Borgata staff did not question Ivey about the Crockfords matter until October 8th, as Ivey was preparing to leave the casino. The following excerpt from the timeline details this, in the Borgata’s version of events:

• Before Ivey left Borgata on October 8, 2012, its Executive Director of Relationship Marketing, Greg Kravitz, asked Ivey about the October 7, 2012 report on the Crockfords’ incident.

• Ivey stated that he did not want to talk about it, that he was disgusted with the situation, that he had done nothing wrong, and that he was going to sue Crockfords to recover his winnings.

• Ivey asked Kravitz if anyone else at Borgata was aware of the Crockfords incident and was told that other employees were aware of the report.

• After Ivey left Borgata on October 8, 2012, additional information regarding the Crockfords’ incident was disseminated via the internet.

• It was established that Crockfords was withholding Ivey’s winnings because it believed Ivey and Sun perpetrated a scam involving the manipulation of cards to gain “first card knowledge.”

Nonetheless, the Borgata wired back to a Mexican bank account of Ivey’s his starting bankroll of $3 million for the session, plus the $824,900 Ivey remained ahead for the session, despite the intentionally losses the Borgata later claimed.

Some Good Cards For Baccarat

Special Accommodations for Ivey

One of the elements sure to come into play as the case moves forward are the large number of special requests made by Ivey which were granted by the Borgata as a pre-requisite for Ivey playing at the casino. The Borgata lawsuit asserts that rather than being for superstitious reasons, as claimed by Ivey, the collection of special requests was only discovered later to be a collection of small elements in a larger scheme to defraud the Borgata.

These are the relevant points from the Borgata’s timeline regarding those special requests:

• At his request, Ivey was provided with a private area or “pit” in which to play.

• At his request, Ivey was provided with a casino dealer who spoke Mandarin Chinese.

• At his request, Ivey was permitted to have a guest sitting at the table while he played.

• At his request, Ivey was provided with one 8-deck shoe of purple Gemaco Borgata playing cards to be used for the entirety of each session of play.

• At Ivey’s request, an automatic card shuffling device was used to shuffle the cards after each shoe was dealt.

• The pretext given for some of these requests was that Ivey was superstitious.

• Ivey misrepresented his motive, intention and purpose and did not communicate the true reason for his requests to Borgata at any relevant time.

• Ivey’s true motive, intention, and purpose in negotiating these playing arrangements was to create a situation in which he could surreptitiously manipulate what he knew to be a defect in the playing cards in order to gain an unfair advantage over Borgata.

• At all relevant times, Borgata was not aware of the defect in the playing cards or Ivey’s true motive for negotiating special arrangements.

A later portion of the timeline involving Ivey’s companion, Sun, details how the Borgata acquiesced to Sun’s requests to handle and position the cards in a certain way:

• Ivey was accompanied by Sun at the table while he played Baccarat.

• Sun spoke to the dealer in Mandarin Chinese.

• As explained below, Sun gave instructions to the dealer on how to flip over and lay the cards out on the table.

• It is not uncommon for Baccarat players to make special requests for how the cards are dealt based on individual superstitions.

• In “Macau” style dealing, for example, players are allowed to touch the cards, and often tear them, bend them, or blow on them. This is permitted because a new deck is used for each hand. Ivey’s scheme did not require new decks for each hand. In fact, his scheme depended on the same decks being shuffled and re-used.

• Borgata accommodated Sun’s request for how cards were to be dealt.

• At no time did Sun or Ivey disclose the true purpose behind Sun’s request for how the cards were to be dealt.

• As explained below, the true purpose of Sun’s request was to manipulate a defect in the playing cards to gain an unfair advantage over Borgata.

Sun’s request, elaborated on elsewhere in the lawsuit, was to ask that lucky or “good” cards (“Hao” in Mandarin) be rotated 180 degrees before being returned to the muck for future dealing by the automatic shuffler, and that the automatic shuffler itself was a necessary component of the scheme, since it left the orientation of the cards undisturbed. These cards, as alleged by the Borgata, weren’t so much lucky as they were the important cards in baccarat – nines and eights for sure, and possibly sevens as well.

One of the more interesting allegations made by the Borgata is that the card-shuffling machine and Sun herself became “devices” as defined under New Jersey gaming statute, which were in turn being manipulated by Ivey (who was making the actual bets) for illegal purposes. This “unfair play,” according to the Borgata, was the core of Ivey’s alleged fraud against the casino.

In a follow-up piece, we’ll look closer at the list of charges filed against Ivey, Sun, and the card manufacturer Gemaco. We’ll also look at some of the mudslinging incorporated within the Borgata claim and examine some of the strong and weak points on both sides of the case.

Front page photo credit: PokerNews.com