## Facts

- Marina District Development Co., LLC operated the Borgata Hotel Casino & Spa, a licensed casino in Atlantic City, New Jersey.
- Professional gambler Phillip D. Ivey, Jr. contacted Borgata to arrange high-stakes baccarat play and negotiated special conditions for his sessions.
- Ivey requested accommodations including: a private pit, a Mandarin-speaking dealer, permission for his associate Cheng Yin Sun to sit at the table, use of one eight-deck shoe of Borgata-branded purple Gemaco cards for each session, and an automatic shuffling device.
- Borgata agreed to these requests; Ivey represented the conditions as stemming from superstition and personal preferences common among high-limit players.
- In fact, the requests were designed to support “edge sorting,” a method of gaining information about upcoming cards from slight asymmetries in the card-back pattern.
- During the first pass through the shoe, Sun asked the dealer (in Mandarin) to rotate certain cards 180 degrees depending on their value, so that high-value and low-value cards would face different directions.
- The automatic shuffler preserved card orientation rather than randomizing it, allowing Ivey and Sun to distinguish valuable from less valuable cards by viewing the card edges and their orientation before play (“first card knowledge”).
- Ivey used this information to vary wager size and betting decisions, shifting the mathematical advantage to himself.
- Over four baccarat sessions in 2012, Ivey won more than $9 million from Borgata.
- After learning how the wins were obtained, Borgata sued Ivey and Sun (and also asserted separate claims involving the card manufacturer), alleging breach of contract and fraud among other theories.
- Borgata’s contract theory rested on an implied agreement that baccarat would be played in compliance with the New Jersey Casino Control Act (CCA), including provisions barring the creation or use of marked cards.
- Both sides moved for summary judgment on key claims.

## Issues

1. Whether the casino–patron relationship for the baccarat sessions formed an enforceable contract that included an implied term requiring play in compliance with the New Jersey Casino Control Act and related regulations.
2. Whether Ivey and Sun’s edge-sorting conduct—getting certain cards rotated and then exploiting the preserved orientations—constituted creating and using “marked cards” prohibited by N.J.S.A. 5:12-115(a)(2) and (b), and therefore breached the parties’ gambling contract.
3. Whether Borgata could establish common-law fraud based on Ivey’s alleged misrepresentations about why he wanted the accommodations and the concealment of the edge-sorting plan.

## Decision

- The court held that a contract existed between Borgata and Ivey/Sun governing the baccarat play and that lawful casino gambling required compliance with the CCA.
- The court granted Borgata summary judgment on liability for breach of contract against Ivey and Sun, concluding they violated the CCA by orchestrating a scheme that created a set of “marked” cards through card-rotation and then betting based on those markings.
- The court rejected Borgata’s fraud theory at summary judgment, concluding the record did not establish the elements of common-law fraud as a matter of law (including material misrepresentation and reasonable reliance) on the facts presented.
- The opinion resolved key liability questions on summary judgment while leaving damages calculations and other issues for further proceedings.

## Legal Principles

- A casino–patron gambling transaction can create an enforceable contract, and statutory gaming requirements can be treated as terms of that agreement because lawful casino gambling exists only within the state’s regulatory framework.
- Under the CCA, conduct that intentionally creates a reliable visual distinction among cards—so that card values can be identified before they are dealt—can qualify as the making and use of “marked cards,” even if the dealer physically turns the cards at a player’s request.
- Parties cannot validate by private agreement a method of play that state gaming law forbids; a casino’s willingness to grant player requests does not excuse a patron’s intentional use of a prohibited advantage.
- Contract liability may be established through proof of a statutory violation incorporated into the parties’ agreement, without meeting the additional elements required for tort liability.
- Common-law fraud requires a material misrepresentation (or actionable omission), knowledge of falsity, intent to induce reliance, reasonable reliance, and damages; inability to prove these elements defeats the claim even if the underlying conduct is unlawful.

## Conclusion

The district court held that Borgata and Ivey/Sun formed a contract for the baccarat sessions that included a requirement to play in compliance with the Casino Control Act, and it granted Borgata summary judgment on breach of contract because edge sorting amounted to creating and using marked cards under N.J.S.A. 5:12-115; however, Borgata did not obtain summary judgment on common-law fraud based on Ivey’s stated reasons for the special accommodations.


Marina District Development Co. v. Ivey, 216 F. Supp. 3d 426, 2016 WL 6138239 (2016)