Tue 29 Aug 2017

Can you be an honest cheat?

The Supreme Court will soon tell us the answer to that question. In November last year the Court of Appeal in England issued its judgement in the case of Ivey v Genting Casinos UK Limited (trading as Crockfords Club) [2016] EWCA Civ 1093.

That case is now before the Supreme Court and it is a very unusual case indeed because it concerns a claim arising out of a gambling contract. The making of gambling or gaming contracts was illegal for much of our history as a consequence of the Gaming Act 1845. However, the Gambling Act 2005 changed that, set up the Gambling Commission and permitted the enforcement of gambling debts. Section 42 of that Act criminalises cheating in gambling generally.

Mr Ivey is a professional gambler. On the afternoon and night of 20 and 21 August 2012 he played 15 shoes of Punto Banco (a variant of Baccarat) and won just over £7.7million. He did it by "edge-sorting". Punto Banco is entirely a game of chance. There is no skill involved at all. Cards with a 7, 8 or 9 are high value cards and if one of these cards is dealt to the player or the banker, it will give that position a better chance of winning than the other. So, a punter who knows that when the first card dealt to a player is a 7, 8 or 9 he will know that it is more likely than not that the player will win. Edge-sorting is possible when the manufacturing process of the playing cards causes tiny differences to appear on the edges of the cards so that, for example, the edge of one long side is marginally different from the edge of the other. These differences can allow a skilled observer to identify cards 7, 8 and 9 to their advantage. Three conditions must occur in order for a person using edge-sorting to be successful. First, the same shoe of cards must be used more than once. Secondly, cards with a face value of 7, 8 or 9 must be turned through 180 degrees by comparison with all other cards. Thirdly, when reshuffled no part of the shoe must be rotated.  The second stage is edge-sorting and so the croupier must be persuaded to rotate the relevant cards without her realising why she is being asked to do so.

But is it cheating?

Mr Ivey said that it was not because cheating required subjective dishonesty and he did not think that he was being dishonest by edge-sorting. The Judge at first instance agreed that Mr Ivey was not being dishonest but took the view that what he did was still cheating. He found that there was no agreement as to what might be termed the industry standard of cheating and that, therefore, it was ultimately for the court to decide on whether the conduct was cheating or not. He concluded that the test for honesty in the context of playing cards was objective. Accordingly, Mr Ivey's own view of the honesty or legitimacy of his conduct was not determinative. He had given himself an advantage by using the croupier as his "innocent agent" by getting her to turn the 7s, 8s and 9s differently and, by doing that, turned a game of chance into a game in which he had a significant advantage. That, the Judge said, was cheating.

The Court of Appeal agreed, but only by a majority. Lord Justice Arden and Lord Justice Tomlinson both took the view that Mr Ivey was guilty of cheating. They held that the word "cheat" was simply to be given its ordinary and natural meaning and did not connote subjective or indeed any dishonesty.

Accordingly it was perfectly possible to be a cheat but not be dishonest. The cheating in this case consisted of interference by a player with the process by which a casino played a game so as to gain an unfair advantage without the casino's knowledge. However, the majority also approached the matter differently from each other. Arden LJ expressly held that dishonesty was not necessary to be found guilty of the offence of cheating under section 42 of the Gambling Act, but Tomlinson LJ disposed of the appeal without deciding the content of the criminal offence of cheating preferring simply to find that the Judge should have concluded that Mr Ivey had brought about a physical interference with the cards in a consciously deceptive, albeit not dishonest manner and that all such conduct fell within the ordinary and natural meaning of cheating.

Lady Justice Sharp, however, disagreed with the majority. She found that the mental element of the offence of cheating under the Gambling Act was one of dishonesty. Indeed she said that "The addition of the word "dishonestly" to the word "cheat" would I think, be a solecism. And I am bound to say that I find the suggestion that someone can be guilty of the criminal offence (in effect) of "honest cheating" at gambling to be a startling one which is not mandated by the language of the statute itself". What instruction, she asked, could be given to a jury on the basis of the test outlined by the majority? "It would not be good enough" she said "for them simply to be told 'the word is an ordinary English word and you have to decided whether what he did was cheating'. The jury would be entitled to expect and receive proper guidance on the matter from the Judge". Accordingly, dishonesty was an essential ingredient of the test for cheating. The Judge at first instance had concluded that Mr Ivey was honest but that he had still cheated. That was not, in Sharp LJ's view, a legitimate approach and, therefore, she would have allowed Mr Ivey's appeal.

The Supreme Court has already heard the appeal and will issue its decision shortly. Given that all four Judges who have heard the case so far have reached different results it will be interesting to see how many differing decisions will come out of the Supreme Court.

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