Thou shalt not cheat! – Ivey v Genting Casinos (UK) Ltd t/a Crockfords

By Alexandru Daniel On

 

Every once in a while, I have the good fortune of reading a court case which is both fun and educational. The UK Supreme Court case Ivey (Appellant) v Genting Casinos (UK) Ltd t/a Crockfords (Respondent)[1] is one such case, which tells an interesting story, while also explaining to the public the limits of cunning trickery in gambling.

The facts of the case have the flavour of a scene from the Ocean’s trilogy, and hearing Lord Hughes recount the story is a real treat (Lord Hughes delivered the unanimous decision of the court, and a video of the judgment’s summary is available at https://www.supremecourt.uk/watch/uksc-2016-0213/judgment.html).

On the night of 20 August 2012 Mr. Ivey, a professional gambler, together with another professional gambler, Ms. Sun, joined a table of Punto Banco Baccarat at the defendant’s casino (Crockfords). With Ms. Sun’s help, and by employing a technique called “edge sorting,” by 6:41 PM the next day, the claimant had accumulated winnings amounting to £7.7 million.

Punto Banco Baccarat is a game of chance, not skill. Six or eight decks of 52 cards are dealt from a shoe, face down, by a croupier. Ordinarily, the croupier slides two cards to the position of the player (“Punto”) and two to the position of the banker (“Banco”). In certain circumstances, the croupier must deal one further card, either to player or banker, or to both. The goal of the game is to achieve, on one of the two positions, a combination of two or three cards which, when added together, is nearer to 9 than the combination of the other position. Ace to 9 cards count at face value, while 10 to king count as nothing. If the total is over 9, only the last figure of the total counts (e.g. if the player has a 5 and a 7, his combination counts as a 2).

“Edge sorting” is a technique which improves the odds of a player by making it possible to identify high value cards and distinguish them from the other cards coming out of the shoe. The technique becomes possible when the pattern printed on the back of the cards is slightly asymmetrical, due to very small differences which can be observed between the two long edges of a card. If a player can manipulate the circumstances so that for the high value cards one long edge is facing in a certain direction, while for all the other cards the other long edge will be oriented in that direction, then he can drastically improve his odds.

In Punto Banco, the high value cards are 7s, 8s, and 9s. After playing with no advantage through parts of four shoes, Mr. Ivey asked for a new shoe of cards. The new shoe had cards with a pattern on the back which could be manipulated by way of “edge sorting.” Mr. Ivey first asked the senior croupier overseeing the game if he could play with the same cards later if he is winning by the end of the current shoe. The senior croupier accepted, because he was the only one touching the cards[2] and no cards were bent in the process. Ms. Sun then, pretending to be superstitious, asked the croupier to turn certain cards in a different direction from others, saying that she believed that if the croupier would do that, it would change her luck. Croupiers are encouraged by their employers to indulge and play along with superstitious behaviour. It plays in the Casino’s favour if players erroneously believe that lucky charms or lucky practices will work in their favour, when in fact they do not improve their odds at all. Mr. Ivey’s bets were rather modest while this shoe was played, but at the end of the shoe he announced that he was winning and wanted to play with the same cards. After the cards were reshuffled, the accuracy of his bets increased. Although the difference in the two edges was small, with a sharp eye, Mr. Ivey could now see before a card was taken out of the shoe whether it was a high value card or not. He played until the early hours of that morning and in the afternoon of the next day, always with the same eight decks of cards. As mentioned before, his total winnings amounted to £7.7 million before he retired from the game on the evening of the 21st.

The practice after such a large win is for the casino to conduct an ex-post investigation. Before this incident, nobody at Crockfords had ever heard of “edge-sorting.” After reviewing CCTV camera footage, the investigators identified the method used by Mr. Ivey. Following the investigation, Crockfords returned Mr. Ivey’s deposit stake (£1 million), but declined to pay Mr. Ivey’s winnings, arguing that he had cheated. Mr. Ivey then sued the casino to recover his unpaid “winnings.” The trial judge and a majority of the Court of Appeal ruled in favour of the defendant. The Supreme Court, in a unanimous decision, affirmed the two judgments, and rejected Mr. Ivey’s appeal.

The issues addressed by the Supreme Court were (1) the meaning of the concept of cheating in gambling; (2) whether dishonesty was a necessary element of cheating; and (3) what is the proper test for dishonesty, if dishonesty were to be considered an essential element of cheating.

Lord Hughes’ opinion in this case (with which Lord Neuberger, Lady Hale, Lord Kerr and Lord Thomas agreed) is very detailed and carefully written. In summary, it was held that what Mr. Ivey did was in breach of an implied contractual term not to cheat, and therefore he was not entitled to his “winnings”; dishonesty is not a necessary element for cheating; and the proper test for dishonesty is an objective test, using the standards for dishonesty that “ordinary decent people” hold.

The arguments made by Lord Hughes are rich in quotable material and besprinkled with funny analogies. One learns, for instance, that “the runner who trips up one of his opponents is unquestionably cheating, but it is doubtful that such misbehaviour would ordinarily attract the epithet ‘dishonest’”;[3] and “[t]he stable lad who starves the favourite of water for a day and then gives him two buckets of water to drink just before the race, so that he is much slower than normal, is also cheating, but there is no deception unless one manufactures an altogether artificial representation to the world at large that the horse has been prepared to run at his fastest.”[4] Conversely, “the unorthodox lead or discard at bridge is designed to give the opponent a misleading impression of one’s hand, but is part of the game and not cheating;”[5] and, my favourite, “pretending to be stupid at the poker table, so that one’s opponent does not take one seriously, and takes risks which he otherwise might not, may or may not be another example [of deception which does not amount to cheating].”[6]

One striking aspect of Lord Hughes’ opinion is the absence of definitions. “Cheating” and “dishonesty” are treated as “I know it when I see it”[7] concepts. In regard to “dishonesty,” this was made explicit in the judgment: “[D]ishonesty is by no means a defined concept. On the contrary, like the elephant, it is characterised more by recognition when encountered than by definition.”[8] Value judgment on the honest or dishonest character of a person’s behaviour was deemed an issue of fact, not law, to be settled by the fact-finder (jury or judge) according to the standards held by ordinary decent people. “Cheating” was analysed in a similar manner. Defining the concept of cheating was described as “very unwise,”[9] and a “near impossible task.”[10] It was also deemed impractical: what ordinary decent people think “cheating” is changes from case to case, depending on the nature and the particular rules of the game the parties engage in.

Although there were two layers of legal rules governing this case, the Gambling Act 2005 and general contract law, this case was settled in the end by resorting to a third normative layer, composed of the rules and customs inherent to the game of Punto Banco Baccarat. Contract law was the gateway into this third normative system, the question whether Mr. Ivey breached an implied contractual term being contingent on whether he breached the rules and customs of the game. The UK Supreme Court was therefore the ultimate referee in a game of Punto Banco Baccarat.

This was not the first time a supreme court relied on the norms and customs of a game in order to settle a legal dispute. The French 1972 case of Rochman v. Durand[11] was decided on the basis of the customs of the game of football. This was a tort case, wherein the victim suffered injuries as a consequence of a collision with the goalkeeper of the opposing team who fell on the ball with the intention of saving it. Because this was a perfectly normal tackle and in line with the rules of the game, the goalkeeper was not at fault, and therefore the claimant’s tort action was dismissed.

However, such cases are rare. The Supreme Court cannot make determinations on the rules and customs of a game in any given circumstances. The dispute must first be framed in a legal manner; an access point into the legal system must be found. It would be hard to imagine, for instance, a case in which the Supreme Court would settle a dispute regarding the offside trap in football. But who knows?

[1] [2017] UKSC 67.

[2] When players touch the cards, the practice is that those cards are discarded and not used again.

[3] [2017] UKSC 67, at para. 45.

[4] Id.

[5] Id. at para. 46

[6] Id.

[7] “I know it when I see it” is Justice Potter Stewart’s famous test for obscenity. Jacobellis v. Ohio, 378 U.S. 184, at 197 (1964).

[8] [2017] UKSC 67, at para. 48. See also Id., para. 53.

[9] Id. at para. 47.

[10] Id.

[11] Cass. 15 May 1972, D. 1972, 606. An English translation is available at https://law.utexas.edu/transnational/foreign-law-translations/french/case.php?id=1202

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Can an agreement that was void at any moment due to a violation of competition law be revived?

Crosspost from Monard Law

When a court invalidates an agreement because the rules of contract law were violated (for example because the agreement was concluded as a result of a mistake or deception), then that agreement is deemed to have never existed. It was never valid and never will be valid. Aside from a few exceptions, everything that has already been performed under the agreement must be undone. If an agreement is invalidated for violation of competition law, the consequences are less clear.

It is possible that at the time of concluding a contract the agreement is already in violation of Belgian and/or European competition law because, for example, a producer imposes minimum selling prices on a distributor. In that case, it is also deemed that the agreement never existed.

However, it is also possible that at the time of its conclusion, an agreement benefits from a competition law block exemption, such as exists for distribution agreements, technology transfer agreements and so forth. The agreement is then deemed not to be in conflict with Belgian or European competition law.

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10 Years After Romania’s Accesion to the EU: European Contract Law (Doctrinal and Empirical Observations)


The Maastricht European Private Law Institute and the Legal Research Institute of the Romanian Academy (Centre for the Study of European Law – CSDE) are organising a conference on current issues of European contract law. 2017 marks a decade after Romania’s accession to the European Union, which is a meaningful moment for legal researchers to evaluate various aspects in different sub-areas of private law with respect to the development of the Romanian legal system as a legal system of the European Union.

The conference will include both doctrinal and empirical observations on European contract law. At the same time, the conference will serve as a dissemination platform for the first empirical study on the application of European law by Romanian national judges.

The event will also honour Prof. Nicolae Turcu, the former president of the Romanian Legislative Council’s Civil Law Section, who passed away earlier this year, to the grief of both legal academia and practice.

The full programme of the event can be found here (in Romanian/English).

Registration requests can be sent to ardae2007@gmail.com until 20 October 2017.

The conference is free of charge.

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Consumers on Fyre: Influencer Marketing and Recent Reactions of the United States Federal Trade Commission

 

*Content re-posted from the Stanford-Vienna Transatlantic Technology Law Forum  – Transatlantic Antitrust and IPR Developments, Bimonthly Newsletter, Issue No. 3/2017 (June 12, 2017)

 

Social Media Disruptions

Silicon Valley continues to change our world. Technology-driven innovations that are disseminated with the help of the Internet have met with great success. This success translates into heaps of followers, as one can see in the case of platforms such as Facebook and Instagram. However, it is the followers themselves who continually affect the purposes of these platforms. A good example in this sense is Youtube; what started out as an alternative channel for the sharing of low-resolution home videos soon became a place where users could actually create their own content professionally. If well-received, this content leads to real Internet phenomena, and eventually become monetized, via direct or indirect advertising. Individuals around the world now have access to their own TV-stations where they can attract funders and actually make a good living out of running their channels.

Online content creation raises issues that are similar to those in the sharing economy (e.g. Uber, Airbnb, etc.). On the one hand, online platforms connect individual content providers with viewers, in the same peer-to-peer fashion that AirBnB connects an apartment owner and a tourist. Given the service-orientation of both activities, provided they are monetized, a clear issue emerges: when does an individual stop being a peer? In other words, what does it mean to be a consumer in this environment? Relatedly, what legal standards apply to the process of creating such content?

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Research on Dispute Resolution Clauses by Maryam Salehijam

Maryam Salehijam is a European Law School (Faculty of Law, Maastricht University) alumna who is currently doing her PhD research at the Transnational Law Centre of the University of Ghent under the supervision of Maud Piers. Maryam is undertaking research on the familiarity of legal professionals (including lawyers and third-party neutrals) with dispute resolution clauses which provide for non-binding ADR mechanisms such as mediation and conciliation. Her research focuses on legal professionals from the following jurisdictions: Austria, Australia, England & Wales, Germany, Singapore, the Netherlands, and the United States.

For her research, Maryam is gathering data by means of a short questionnaire which can be accessed here and which Maryam elaborates on below. Should you have any expertise in the relevant jurisdictions and would like to contribute to her research, we kindly invite you to have a look at the questionnaire or contact Maryam directly.

By Maryam Salehijam:

​Call to Participate in a Questionnaire on Dispute Resolution Clauses

There is a lack of clarity regarding the obligations that arise from dispute resolution agreements with a mediation/conciliation component. In order to reduce this uncertainty, a chapter of the BOF funded PhD research of Maryam Salehijam (supervisor: Professor Maud Piers) from the Transnational Law Center at the University of Ghent focuses on the question “What are the parties’ obligations under an ADR agreement?”

To answer this question, the research is divided into two stages: the first stage involves a questionnaire that assesses the familiarity of legal professionals –including lawyers and third-party neutrals- in selected jurisdictions (Austria, Australia, England & Wales, Germany, Singapore, the Netherlands, and the United States) with dispute resolution clauses calling for non-binding ADR mechanisms such as mediation/conciliation. Moreover, the questionnaire provides willing participants the opportunity to copy and paste a model or previously utilized dispute resolution clause. In the second stage, the clauses gathered as well as clauses extracted from other sources will be content coded using the software NVivo in order to determine which obligations tend to be reoccurring in the majority of the clauses under analysis.

The questionnaire targets individuals who have experience with commercial dispute resolution. The participation in the short questionnaire will require minimum effort, as most questions only require a simple mouse-click. Please note that the information entered in the survey is kept anonymous unless indicated to the contrary by the participants. Moreover, as the analysis takes place on an aggregated level, the findings will not disclose personally identifiable information. Accordingly, the information provided will only serve scientific purposes.

To complete the questionnaire, please click here to access the survey. The closing date of the survey is 29th April 2017.

If you wish to provide the model/previously used dispute resolution clauses without completing the questionnaire, please email Maryam Salehijam at maryam.salehijam@ugent.be

Maryam Salehijam

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Innovating Private Law: On Law and Technology (Pavia, 8 February)

On 8 February I had the pleasure to accompany Jan Smits for a visit to Pavia, where we gave a presentation titled ‘Innovating Private Law: On Law and Technology’, on the third day of the Innovating Legal Studies and Practice Winter School 2017.

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