Out-Law News | 12 Jul 2017 | 3:28 pm | 3 min. read
Phillip Ivey lost his case before the Court of Appeal last year, but has won the right to appeal that decision before the Supreme Court. A one day hearing has been set for Thursday 13 July .
"The issue to be decided is whether an implied term not to cheat in a gambling contract is only breached where there is dishonesty," said gambling law expert Audrey Ferrie of Pinsent Masons, the law firm behind Out-Law.com.
Ferrie said the judgment of the Supreme Court is unlikely to be issued for a number of weeks.
In November 2016, the Court of Appeal ruled that Ivey had breached an implied contract with Crockfords Club casino in London when he deployed a form of 'advantage play' to win more than £7.7m playing the card game Punto Banco.
Phillip Ivey admitted he used 'edge-sorting', which according to the Court of Appeal judgment "involves exploiting design irregularities on the backs of playing cards", to gain an advantage over Crockfords when playing the game in August 2012.
Ivey claimed he used legitimate gamesmanship to convince casino staff to rotate the cards to exploit the edge-sorting method and that the casino should have been aware of the technique and that it could protect itself against its use. He further claimed that cheating requires "a dishonest state of mind" and that he because he was of the "honest belief that his actions were not cheating" his play could not be considered as that of a cheat.
However, Crockfords argued that it was unaware of the edge-sorting method at the time of Ivey's winnings and that use of the technique unfairly altered the odds of the Punto Banco game against it.
The three Court of Appeal judges who heard the case issued a split two-one decision which held that Ivey's play constituted cheating under the Gambling Act of 2005.
In a view which supported Crockfords' case, Lady Justice Arden said that she did not "consider that dishonesty is a necessary ingredient of the criminal offence of cheating" and that "interference with the process of the game without proof of dishonesty may be enough to constitute cheating for the purposes of [the Gambling Act]".
However, in her dissenting minority opinion, Lady Justice Sharp said the suggestion that someone can be found guilty of 'honest cheating' at gambling was "a startling one which is not mandated by the language of the statute itself."
It is an offence, under section 42 of the Gambling Act, to cheat at gambling or do anything for the purpose of enabling or assisting another person to cheat at gambling. A gambler can be considered to be committing an offence of cheating even if they do not win anything or improve their chances of winning anything by engaging in the activity.
According to the Act, cheating at gambling "may, in particular, consist of actual or attempted deception or interference in connection with the process by which gambling is conducted, or a real or virtual game, race or other event or process to which gambling relates".
A maximum prison sentence of two years, as well as a fine, can be imposed on those convicted of cheating at gambling.
Ferrie of Pinsent Masons said: "This case is important and has attracted a great deal of interest in the gambling sector for several reasons: for a start, it is the first case since the Gambling Act came into force to consider directly the section 42 offence of 'cheating'."
"There have always been arguments about skill in gambling, such as whether or not poker is a game of skill. This case considers the activities of a professional gambler who argues that he is using his skill and knowledge to beat the house. If he is successful in his appeal then other professional gamblers may well use 'edge-sorting' or devise similar methods. This could have financial implications for operators," she said.
"The case is also significant as it is appears to reflect a trend in the growing number of cases against operators for disputed winnings. Just recently, for example, it was reported that a student had sued bet365 after she did not receive winnings, and a return of her stake, totalling more than £1m for bets placed on horse races. The gambling operator has claimed the student's bets were placed using third party funds, in breach of its terms and conditions," Ferrie said.
"These cases are noteworthy in the broader context of the agenda that the Gambling Commission is pushing, where it is seeking fairness from operators towards their customers and their use of clear terms and conditions," she said.