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Borgata Casino Files Cross-Appeal Against Phil Ivey

Casino Asks Appeals Court To Revisit Lower Court's Ruling

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The Borgata casino-hotel in Atlantic City is raising the stakes in its battle against Phil Ivey in the United States Court of Appeals for the Third Circuit.

Atlantic City’s top casino in terms of gambling winnings filed a cross-appeal Thursday, which seeks the higher court’s examination of “each and every ruling adverse to [Borgata]” at the hands of the New Jersey District Court in late 2016.

In 2014 court filings, Borgata alleged that Ivey and his playing partner defrauded it and also engaged in a RICO enterprise, causing Borgata “ascertainable economic damages.” The allegations stemmed from baccarat sessions in 2012. The casino wanted the court to treble $9.6 million worth of the alleged damages. In other words, it wanted nearly $30 million from Ivey.

“Ivey and Sun participated in a RICO enterprise in violation of federal law when they transferred money that was the proceeds of their fraud against Borgata to a foreign bank account in Mexico, in violation of the federal wire fraud and anti-money laundering statutes,” the casino claimed.

District Court Judge Noel Hillman mostly disagreed with Borgata, finding in late 2016 that Ivey and Cheung Yin “Kelly” Sun did not commit fraud nor violate RICO acts at the state and federal levels. Rather, Hillman said that the gamblers breached their contract with Borgata when it came to playing baccarat. The judge awarded Borgata a $10.1 million judgement, which included money that Ivey won at craps using the money he won at baccarat. In other words, the judge’s ruling sought to return each party to their economic positions prior to the edge-sorting.

“It is axiomatic that a breach of contract alone is not fraud,” Judge Hillman wrote in his 30-page opinion. “Nor does every act of deceit meet the elements of fraud. Fraud, whether as codified or at common law, requires a higher showing. Ivey and Sun did not defraud Borgata in the legal sense, just as a football team that runs a pass play instead of a running play does not defraud the other team. This is because their [numerous gaming requests] did not violate baccarat’s rules, were not material to Borgata, and no independent obligation to disclose existed under the circumstances. Their conduct is far from admirable, but fraud requires more.”

The absence of a sustainable fraud claim “doomed any showing of the commission of the predicate acts required to sustain Borgata’s state and federal RICO claims even if the other elements could be met,” Hillman said.

Ivey, widely considered one of the best poker players in history, appealed the $10.1 million judgement in late August. The lower court previously ruled that Borgata can try and collect on the judgement while the Third Circuit appeal is pending.

According to Borgata’s legal team, a reversal from the Third Circuit in either direction is unlikely. The casino said in a court filing that fewer than 15 percent of private civil cases between 2011 and 2015 were reversed on appeal. “[I]t is significantly more likely that a District Court will be affirmed on appeal,” wrote the casino’s counsel.