The Crockfords case set a new standard for defining “honesty” in a UK civil court.
Phil Ivey, the Hall of Fame American poker pro, lost his long battle with the Crockfords casino for £7.7 million in baccarat winnings. After a 3-year legal battle, the UK Supreme Court ruled against Phil Ivey’s appeal of two earlier decisions.
The lawsuit stemmed from baccarat sessions at Crockfords Club in Mayfair in 2012. Using a technique called edge sorting, Phil Ivey and a friend played the Punto Banco version of Baccarat and won £7.7 million. At a point, Crockfords management refused to pay Ivey his winnings, which he has since been fighting to recover those funds.
After the 2012 baccarat game in question, Ivey was told the casino would wire the money to him in Las Vegas. His stake of £1m was returned to him, but the £7.7 million in winnings was never sent.
Crockfords claimed that edge-sorting is cheating. No doubt, Ivey and his colleague were “dishonest” in their dealings with the casino (as one judge rules), but the various court cases over the years considered whether or not dishonesty was necessarily an element of the offence of cheating.
2016 UK Court of Appeals Decision
In a 2016, Ivey had challenged the majority decision in the UK Court of Appeals. The appellate court dismissed his case against Genting Casinos UK, the Malaysian gaming group which owns Crockfords. While Ivey was adamant that he played fairly, Genting said the “edge-sorting” technique that he used, was not a legitimate strategy.
The majority vote of the court of appeal, was that being knowingly dishonest was not a necessary element of cheating. So Ivey’s case was dismissed in November 2016. That was not the end, though, because the UK Supreme Court agreed in February 2017 to hear his appeal.
Edge Sorting in Baccarat
Edge sorting is spotting tiny irregularities in the patterns on the back of the card, then exploiting the information to increase one’s chances of winning. Chueng (“Kelly”) Yin Sun, Ivey’s companion at the baccarat table, is skilled in the technique, so Ivey bankrolled her baccarat sessions with £1 million.
The two did the same in several casinos over the course of 2012. Most famously, the two used edge sorting to beat the Borgata in Atlantic City out of $9.6 million.
Once the Crockfords case was known, Borgata sued Phil Ivey for $15 million, including the losses, comps, and what they should have won, according to the house edge. A New Jersey judge eventually gave Borgata a $10.1 million, involving the winnings and comps Phil Ivey accrued.
Why Edge Sorting Was Considered Dishonest
Though Ivey did not actually personally touch any cards during the baccarat game, he convinced the croupier to rotate out the most valuable cards. When he asked for those changes in the deck’s order, Phil Ivey suggested that he was superstitious.
The Gambling Act 2005 states that it may be considered cheating “without dishonesty or intention to deceive: depending on the circumstances it may be enough that he simply interferes with the process of the game”.
Lady Justice Arden, a judge in the case, ruled that actions by Phil Ivey and Cheung Yin Sun were in interference with the process of the Punto Banco game, saying that there was no doubt.
Crockfords Argument against Edge Sorting
Stephen Parkinson, head of criminal litigation at Kingsley Napley, the law firm that represented Crockfords, said in a press release, “This is one of the most significant decisions in criminal law in a generation. The concept of dishonesty is central to a whole range of offences, including fraud.
“For 35 years, juries have been told that defendants will only be guilty if the conduct complained of was dishonest by the standards of ordinary, reasonable and honest people, and also that they must have realized that ordinary, honest people would regard their behavior as dishonest.
“The supreme court has now said that this second limb of the test does not represent the law and that directions based upon it ought no longer to be given by the courts.”
The Two-Stage Test for Honesty
A landmark case in 1982 created a new system of determining honesty when it came to determining rulings in certain cases. Since 1982, juries have been asked to apply a two-stage test when finding the solution to the dishonesty question.
Under the 1982 standard, on the objective end, the question in such cases is whether the action a defendant took was dishonest by the standards “of ordinary people”. On the subjective end, if it was dishonest, the legal question is whether the defendant himself must have realized that their conduct would have been seen as dishonest by those standards.
In the original two-stage test, both questions had to be “Yes” for the defendant to be judged to have been dishonest. In the Ivey ruling, the Supreme Court stated that the second part of the two-stage test had the inadvertent effect that the more warped the defendant’s standards of honesty, the less likely for the defendant to be judged to have behaved in a dishonest behavior.
Thus, the second leg of the two-stage test no longer applies in UK courts. Phil Ivey’s edge-sorting case therefore is a landmark in its own right.
Kelly Cheung: “A Queen of Sorts”
Cheung Yin Sun, who was known by most as Kelly, was Phil Ivey’s colleague in the Crockfords case. Ivey may seem like the big name in the legal cases, but he was only half of the story.
Cheung Yin Sun was born to well-to-do parents in northeastern China. During her youthful travels around the world, she lost all her spending cash at a Las Vegas casino in the mid-2000s. After being arrested, she decided to learn how to beat the casinos, so she became a master at edge-sorting.
In 2012, she met Phil Ivey in an Australian casino and impressed him with her edge-sorting abilities. The two began traveling to top casinos around the world, where Phil Ivey used his high roller status to get special conditions attached to his baccarat sessions. Using these special conditions, Kelly Cheung could use her edge-sorting to gain an advantage. The two played for $50,000-a-hand and $100,000-a-hand, racking up huge wins. Had Crockfords not noticed something suspicious, the two would have gotten away with edge-sorting.
