Claims Dismissed in Borgata–Gemaco Card Case

US card maker Gemaco has won summary-judgment dismissal of claims made against it by Atlantic City’s Borgata Hotel Casino & Spa.

Five of the six civil allegations brought against American playing-card manufacturer Gemaco were summarily dismissed by the presiding judge in the multi-part trial centered on the “edge sorting” advantage-play scheme orchestrated by professional gambler and poker player Phil Ivey.

The ruling, signed by presiding US District Court Judge Noel L. Hillman, granted summary judgment in Gemaco’s favor on five out of six counts brought by the Borgata’s parent company, Marina District Development Corp. The five legal allegations, which included claims of negligence, breach of contract, and breach of implied warranty, concerned cards supplied under contract by Gemaco to Borgata. The cards in question were later exploited by Ivey and his co-defendant, Cheung Yin Su, as part of a complex edge-sorting scheme.

The Borgata had previously won a judgment against Ivey and Sun in the amount of $10.13m (￡7.22m), but last year, Judge Hillman ruled that the Borgata’s claims against Gemaco must also be heard. Since the Borgata named Gemaco as a co-defendant in the same action it brought against Ivey and Sun, Gemaco could also have been held liable for millions in damages.

Minor damages

Instead, the summary judgment in Gemaco’s favor leaves only one of the Borgata’s possible claims still standing – a contract-based breach of express warrant. However, as Judge Hillman noted, the actual damages the casino could recover would total only $26.88 (￡19.17), the sum of the 32 decks (at a cost of $0.84 [￡0.60] each) used during Ivey’s four separate mini-baccarat sessions in 2011 and 2012. Judge Hillman wrote: “The Court wonders whether, under such circumstances, the game is worth the candle.”

The Borgata’s claims, in essence, were that Gemaco should be held liable because the high-visibility, bright-purple “Gem” cards exploited by Ivey and Sun contained minute asymmetries that allowed the pair’s scheme to work. In this case and in a similar matter in the United Kingdom involving London’s Crockfords Casino, the pair admitted employing the scheme in at least seven different casinos in four different countries. They also requested the bright purple Gemaco cards, which employed a “full bleed” card back design that Sun had trained herself over the course of years to discern.

However, Judge Hillman dismissed the Borgata’s contention that the cards themselves were the proximate cause, the “but for” element that allowed the scheme to work. As Judge Hillman wrote:

“Borgata views the asymmetries in the Gemaco cards as the dispositive factor in the scheme, but it appears to ignore its own participation. Borgata provided the dealer who turned the cards and Borgata permitted her to do so. Borgata provided the automatic shuffler. Borgata did not substitute a new deck of cards during the entire play sessions, which lasted for over sixteen hours each time. Borgata even provided the requested type of playing cards.”

In a related part of the 27-page opinion, Judge Hillman offered more:

“… it is not Gemaco’s cards that were the ‘but for’ cause of Borgata’s losses, but rather all the subsequent?required elements requested by Ivey and agreed to by Borgata, each a required and integral part, which together caused Borgata’s losses. It is true that the scheme would not have worked without asymmetrical cards. They were necessary for the scheme. But they were equally insufficient. Out of the box, asymmetrical cards are symmetrical until strategically turned and maintained in that orientation. In that sense, it was Borgata’s acquiescence in Ivey’s accommodations that were the but for cause of Borgata’s losses.”

Private settlement on the cards

Noting that the Borgata could only win the possible $26.88 judgment after a full trial had been completed, Judge Hillman offered three alternatives for resolving the Gemaco portion of the case:

1. To proceed to trial on Borgata’s breach of warranty claims,
2. To stay Borgata’s claims against Gemaco and certify as final Borgata’s judgment against Ivey and Sun pursuant to Rule 54(b) so that Ivey and Sun’s appeal may proceed,
3. To afford Borgata and Gemaco a period of time to enter into a private resolution of Borgata’s claims against Gemaco, or proceed in some other manner.

The second of the three options represents the likeliest continuing course. While Judge Hillman allowed for the possibility of a nominal private settlement between the Borgata and Gemaco, the greater reason for resolving this portion of the case is that the Borgata’s civil case against Phil Ivey and Cheung Yin Sun also remains unresolved.

In December of 2016, Judge Hillman granted the Borgata a $10.13m?(￡7.22m) judgment in connection with Ivey and Sun’s scheme. Ivey, who bankrolled the edge-sorting gambit, soon filed a formal appeal. However, Hillman stayed that appeal on several legal and procedural grounds since the claims against Gemaco made as part of the same case were still outstanding.

The finalization of the Gemaco portion of the case should come within weeks, and it will then allow Ivey’s appellate effort to move forward. Ivey’s claims against Crockfords in the UK case also went to appeal, all the way to the UK Supreme Court, where his complex scheme to twist the game’s odds in his favor was ruled unlawful under English gaming law.