A few weeks back, I wrote a post about a lawsuit between the Borgata Casino and world renowned poker player and gambler, Phil Ivey. In the lawsuit, the Borgata accused Ivey and a partner, Cheng Yin Sun, of engaging in an "edge sorting" scheme, which allowed them to shift the odds of Baccarat in their favor and win more than $9.6 million over several visits to the casino. The U.S. Court of Appeals for the Third Circuit described their actions as follows:
The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.
The Borgata successful moved for summary judgment against both men. It held that casinos and players enter into an implicit contract to, among other things, abide by New Jersey's Casino Control Act ("CCA"). The court determined that, by employing the edge-sorting scheme, Ivey and Sun were using marked cards to play the game, which is prohibited by the CCA. As a result, they breached their contract with the casino. After finding in the casino's favor on liability, the court ordered supplemental briefing on damages. After considering those briefs, the court awarded the casino $10,130,000.
The court held that the appropriate method to assess damages was to restore the status quo ante -- i.e., to return the parties to their positions prior to the formation of the contract. It held that Ivey's and Sun's use of marked cards violated the CCA and voided the contract between them and the casino. Because the contracts were void, restoring the parties to their pre-contract position was the appropriate remedy. The casino was, therefore, entitled to the return of all of Ivey's winnings, including the money he won playing craps because "those winnings were directly traceable to his prior Baccarat winnings -- i.e., he used Baccarat winnings to play craps."