Famed poker pro with ‘remarkable’ $9.6M scheme has to pay it back
washingtonpost.com
washingtonpost.com
I also think it should have been fairly obvious to the casino employees that some kind of advantage play was happening. Ivey is very well known as a poker player, and while he also is known as a gambler, arbitrary superstitions are outside of his character. The specificity of the conditions he asked for should have tipped his hand earlier than they did, but the casinos probably treated him like any other baccarat whale.
Hopefully this decision is reversed. I don't know what part of the law it supposedly broke, but it seems like the judge believes that the player in the casino has a legal obligation to be a sucker.
I went and had a go at the New Jersey Casino Control Act and I believe that the judge is saying that Ivey violated 5:12-114(2), which states: "It shall be unlawful for any person playing any licensed gambling game knowingly to use bogus or counterfeit chips or gaming billets, or knowingly to substitute and use in any such game cards or dice that have been marked, loaded or tampered with." (Internal punctuation omitted.)
He's not saying that Ivey had to just blithely take whatever happened; instead, I think the judge is making the argument that Ivey "rigged" the cards to function just like marked cards so they should be treated as such. He's not saying that Ivey committed a crime, just that the game was unlawful under the NJ CCA because the NJ CCA prohibits the use, by either party, of cards that seem to be marked. The law doesn't make a distinction as to who is using the cards or who did the marking, even if the marking is done by the manufacturer.
Link to law (it's a long one but I do not like link shorteners): http://lis.njleg.state.nj.us/cgi-bin/om_isapi.dll?clientID=5...
I enjoy "Robin Hood" stories as much as the next person, but if he had walked in with his own deck of cards and asked to use them (and the casino agreed) is the fault with the casino or the player?
The referenced section is 5:12-115(a)(2) and (b):
"a. It shall be unlawful: ... (2) Knowingly to deal, conduct, carry on, operate or expose for play any game or games played with cards, dice or any mechanical device, or any combination of games or devices, which have in any manner been marked or tampered with, or placed in a condition, or operated in a manner, the result of which tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game.
b. It shall be unlawful knowingly to use or possess any marked cards, loaded dice, plugged or tampered with machines or devices." [1]
EDIT:
The Judges opinion [0] also makes it clear that he is following the precedent set in Golden Nugget v. Gemaco, Inc. [2], where it was ruled that a game was voided because the casino accidentally used unshuffled decks. More specifically, without assigning fault to any party, the court argued that the game was not authorized into the Casino Control Act, thereby voiding the contract.
In this case, the judge argues that, although the specific statute of the CCA that was violated is different, the difference is not relevent to the arguement set forth in Golden Nugget, so the same result applies.
[0] http://courthousenews.com/wp-content/uploads/2016/12/ivey.pd...
[1] http://www.state.nj.us/casinos/actreg/act/docs/cca-article09...
[2] http://www.law360.com/articles/621651/casino-doesn-t-owe-1-5...
I disagree with the people in this thread who say that the judge expects Ivey to be a patsy.
"knowingly to use or possess any marked cards"
But, they did. So the games played with those cards(/unshuffled decks) shouldn't count.
If the law doesn't function in both directions it isn't law, it's codified graft.
But it does appear to be dependent on knowledge, as per the law quoted in this comment: https://news.ycombinator.com/item?id=13227445
Ivey and Sun knew how to read the marked cards.
But that's only half the post you linked to... Importantly, the precedent involving the unshuffled deck didn't involve knowledge. Despite everyone's intentions the game was not setup correctly so it didn't count.
If so, then these games (all games with these decks) were also not setup correctly. Either all games with these cards are improper or none are.
And importantly, nothing other than penalizing the casino will change anything. This ruling incentivizes them to leave marks in their cards, dice, etc, and call them out in the future to invalidate any unpleasant results.
Now if any other player performed such a task, sure, they're probably able to make a case too. But not every baccarat player met the criteria in this case.
Now rotate some of the cards 180°. Those rotated cards are now distinguishable from the other cards, because the card print is not rotational-symmetric. This rotation is what caused the cards to be marked, even though the printed pattern was exactly the same.
Typically card backs are rotational-symmetric in order to avoid this. However, it seems like this particular pattern had imperfections -- within 1/32 of an inch -- which a trained eye could recognize. (The judge even admitted this as quite a feat.)
The player (Ivey) did not bring, substitute, touch nor coerce the casino into doing anything with the cards. His assistant asked the dealer to flip some cards and he abided willingly, supposedly on behest of the casino to accomodate a whale. They did nothing under the table.
Like most people on here IANAL, but this ruling doesn't seem right, where "right" is the letter of the law.
> Knowingly to deal, conduct, carry on, operate or expose for play any game or games played with cards, dice or any mechanical device, or any combination of games or devices, which have in any manner been marked or tampered with, or placed in a condition, or operated in a manner, the result of which tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game.
Specifically, it seems like the cards were "placed in a condition" and "operated in a manner" which "alter[ed] the normal chance of the game" for Ivey and Sun.
They were marked when Ivy's assistant asked to turn the 9s around 180 degrees.
The design on all the cards was identical; it's not as though face cards had a different pattern on the back. The design just happened to be very slightly asymmetric so that turning the 9 cards served to mark them.
If you were not able to turn the cards, the asymmetric back would provide no information.
Also I think b. is about the house: it is about owning or using such cards. The cards where not Iphy's, the casino was the owner and the one that was using them.
But apart from that, just imagine what the implications are if this verdict is correct. Imagine that you walk into a casino and play a card game, and you see that the dealer is consequently making a mistake so that the result of the game is not random anymore. The verdict is saying that you are still allowed to play, but only if you choose a losing strategy. If you would choose to turn this knowledge of the dealer's mistake in your advantage, you would commit a crime .. ?
This is not my reading of the decision. Rather, my reading of the opinion is that, regardless of if you take advantage of it or not, the game is no longer authorized under the Casino Control Act, and therefore is void.
Note, it is not clear to be that any "crime" was commited in this case. Rather, the ruling was that the game was invalid and therefore the appropriate solution was to return the parties to the state where they were in prior to playing the game. The precise wording (quoted from Golden Nugget) is:
"“Since the rescission of a contract essentially voids the contract, it follows that the remedy used in situations of rescission should be used in situations of voidance. Thus, since the contracts entered into here are void, returning the parties to their position prior to the formation of the contracts is the appropriate remedy.”"
Interestingly, in the Golden Nugget case, it was clearly the casino who made a mistake (failing to use a shuffled deck).
"The CCA isn't fault based, according to the judge, who explained that it's irrelevant whether the casino or the players are to blame for the mishap. It only matters whether the mini-baccarat game was authorized under the CCA, which it wasn't, the judge said." [0]
[0] http://www.law360.com/articles/621651/casino-doesn-t-owe-1-5...
If this is true, it means that any game ever played with those 'marked' cards is void. Since Baccarat is a winning game for the casino, it would mean that this verdict could cost the casino many times more than what it has won against Phil Ivy.
Maybe I'm too cynical, but I don't believe that anyone who will now start a court case to claim his money back from a game with these cards has even the slightest chance to win. Surely the judge will find a way to interpret the law text in another way so that it again favors the casino.
Further, in order for a marking to count, it has to "tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game." If the only mistake that the dealer makes is some form of an information leak, and no one modifies their behavior based on the information being leaked, then this condition would not be met.
If, instead, the dealers mistake changed the odds of the game regardless of if the player acted on it, the this clause would be invoked. Indeed, this is likely the intended case of this clause, as the alternative is that the house can cheat.
You'll note that there are not even any punitive penalties being applied. Only the money earned during the game is to be returned.
And proceeds that were gained using the winnings.
Part of the ruling was that Phil Ivy had to pay back $500,000 which he won in a craps game as well.
I've made a longer post explaining why I don't believe this judgment was correct, but suffice to say, you can't choose half a sentence of a law and decide that because that bit fits, your case is made.
The (a) part of that law is written for casinos, not players, as it refers to dealing and operating games. The requirement is that they do this knowingly. The casino didn't know.
The operation of this game did not in any way deceive the public. No player was tricked. The operation of the game also did NOT alter the result of the game. The same side (banker/player) would have one irrespective of the rotated cards, as the rotation has no affect on gameplay and the outcomes are deterministic (no choices during play like in blackjack).
All that was changed as a result of the extra knowledge was which side to bet on. The game itself was not affected in any way.
This para seems to say that it applies to any person, including corporate persons.
I still think this was the wrong opinion. If the cards are not shuffled that is a clear violation of the rules of the game. No such violation occurred here.
There are no such rules about card orientation because usually casinos use ones with symmetrical backs.
"The Court found that Ivey and Sun breached their contract with Borgata to play Baccarat in compliance with the CCA by violating N.J.S.A. 5:12-115(a)(2) and (b) when they knowingly engaged in a scheme to create a set of marked cards and then used those marked cards to place bets based on the markings."
That's the finding I disagree with, and seems to be the point that the entire judgment rests on.
Section 12 of the act [1] falls under "Sanctions", which to me is the first clue that this section is intended to apply to the casino, not the customer. I do concede that the wording "any person" would also include customers.
Let's take a look at 5:12-115(a)(2) and see if we can narrow down exactly what Ivey and Sun are supposed to have done here:
"It shall be unlawful...knowingly to deal, conduct, carry on, operate or expose for play any game or games played with cards, dice or any mechanical device, or any combination of games or devices, which have or tampered with, or placed in a condition, or operated in a manner, the result of which tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game."
Well they certainly didn't deal, operate or expose the cards to play - the casino did that. There is an argument that without players, the game can't exist, so let's accept that both parties are responsible for "conducting" and "carrying on" the game.
The cards were weren't tampered with - they were imperfect, but is that the same as "marked"? I don't believe so, and I think the judges assertion that they are should be challenged on this. Regardless, "Placed in a condition, or operated in a manner" does seem like a reasonable way to describe the rotation of specific cards. The CCA makes no assumption or distinction about who places or operates them, so we don't need to get into whether it was the casino or the player who did this. It happened and that's enough.
Strip out the bits that Ivey/Sun can't possibly have done and we're left with this:
"It shall be unlawful...knowingly to conduct [or] carry on any game or games played with cards, which have in any manner been marked, or placed in a condition, or operated in a manner, the result of which tends to deceive the public or tends to alter the normal random selection of characteristics or the normal chance of the game which could determine or alter the result of the game."
So, to the result. The use of the words "tends to" means that it doesn't matter that it's a private room with no public to be deceived. The question the law asks as it applies to this case is:
Given that Baccarat has a predetermined result at the time of dealing (there is no option for either player or dealer to influence the cards which will be drawn in the course of the game - the only variable is the stake), does the act of rotating a card, without changing its position in the deck:
- tend to deceive the public? I don't see how it possibly can.
- OR tend to alter the normal random selection of cards? Certainly not.
- OR tend to alter the normal chance of the game which could determine or alter the result of the game? It can't alter the result. It can't determine the result - there are still three to five cards which are entirely chance. It DID alter the normal chance of the game in this case, but does it "tend to"? From the article: "Baccarat is a casino game well known for unique and superstitious rituals," Hillman noted in an October opinion. "Thus, Sun telling the dealer to turn a card in a certain way did not raise any red flags for Borgata." That suggests to me that it does not "tend to" affect the chance, which is the test required by the law.
On the argument above, I would suggest that Ivey and Sun were not in breach of 5:12-115(a)(2) at all. 5:12-115(b) simply says "It shall be unlawful knowingly to use or possess any marked cards, loaded dice, plugged or tampered with machines or devices." They didn't posess them, and I don't believe using the casino's standard cards, which meet the casino's own quality requirements, can be considered to be using "marked" cards. If they are, and the casino are still using the same cards, they're now knowingly in possession of marked cards themselves.
Then we get to 5:12-115(c):
"Any person who violates this section is guilty of a crime of the fourth degree and subject to the penalties therefor, except that the amount of a fine may be up to $50,000, and in the case of a person other than a natural person, the amount of a fine may up to $200,000."
The Golden Nugget case hinged on the point that the deck wasn't shuffled. Since the CCA requires random decks, it has no provision for games played with a non-random deck. The argument is that because the CCA made no provision for the game, it can't have been a legal game under the CCA, and therefore it should be void. This case is completely different - even if we accept that Ivey breached the CCA, the CCA already makes provision for such a breach, and specifies the appropriate remedy should it occur.
There's also the small point that the DGE has investigated the Golden Nugget case and concluded that there was no breach of the CCA [2] - while it may not be a court decision, it should have some weight.
It looks to me like the judge has this very wrong, and any lawyer worth his money should be able to deal with it on appeal.
[1] http://www.nj.gov/casinos/actreg/act/docs/cca-article09.pdf
[2] https://www.casino.org/news/golden-nugget-new-jersey-unshuff...
Even if it does, there is a specific penalty defined for breaching that section of the CCA, so it's not comparable to the Golden Nugget case.
https://news.ycombinator.com/item?id=13238503
> Specifically, it seems like the cards were "placed in a condition" and "operated in a manner" which "alter[ed] the normal chance of the game" for Ivey and Sun.
If the judge considers the cards to be marked because of manufacturing flaw that made the cards not perfectly symmetrical, then that manufacturing flaw would be present in all the casino's card games, rendering them all invalid and illegal and opening up the casino to lawsuits for return of losses from illegally operated games, which were illegal essentially because of a technicality. This would likely result in the casino going bankrupt.
If the judge considers the cards to be marked because they were rotated, then the judge has effectively outlawed a consensual agreement between the casino and the player regarding game conditions, which is neither in the spirit not the letter of the referenced law. True, the player exploited information asymmetry because he was aware of information that the casino was not, but that's a perfectly acceptable advantage which casinos exploit all the time when they don't explicitly explain to casual players how the rules of their games mathematically guarantee a house advantage over the long term.
The crucial word is "knowingly". You would have to demonstrate intent for all of the games with those cards to be under scrutiny.
"...ruled that a game was voided because the casino accidentally..."
How does one accidentally knowingly do this?
But he didn't substitute them, did he? The cards were already in play and he noticed and took advantage of an irregularity.
The law DOES make a distinction based on who did the marking. Your quote clearly states that it refers to people playing the game, which would exclude the casino.
The cards also weren't marked. The backs were identical. The dealer selectively rotating some cards is what made some identifiable.
The law also says that the player must "substitute and use" marked cards. The casino made the substitution. The cards were marked or tampered with.
Moreover, if this interpretation is correct, and the game is simply invalidated, then it is far more exploitable. In the case of any kind of marked card a player could simply bet huge (randomly) and if they lose invoke this law, invalidating the game.
This is not exploitable because it is within the casinos power to not use marked cards. Further, if the casino did use marked cards, and the player won; then the casino could invoke the same law and invalidate the winning.
This is essentially what happened in Golden Nugget v. Gemaco (the main precedent cited in this case); where the casino lost big as a result of using non-shuffled decks. Despite the fact that this was clearly the casino's fault, the court ruled that (regardless of fault) because the game was no longer authorized under the Casino Control Act, it was illegal, and any contract based on it was void.
https://www.quora.com/How-many-new-decks-of-playing-cards-do...
A thousand decks is about 4 cubic feet, if my math holds up. A 20' container is about 1360 cubic feet.
We only have their word that they didn't know the deck was marked. They could have been cooperating in fraud for years. Let certain players win, especially against a troublesome high-roller. Save it to invalidate a huge win, etc.
It's improbable that their anti-fraud team didn't catch the issue because it's so obvious. Do a manual shuffle and fan the cards. 1/32nd of 2.5 inches is 1/80th of the width. Greater than 1%. I used to manually grade gems. In the beginning I could hardly tell 3mm from 4mm, in the end I could spot a 3.05 in a tray of 3s, and gems don't sit flush in your hand while you compare them. (At any rate, they will check after this, and mechanically I hope!)
The best way to deal with this is make the casino eat the loss. If they're innocent it'll teach them to be more careful.
> Sun trained herself to identify aberrations along the left or right margins of the card backs, no wider than 1/32 of an inch, the Times reported.
Also, the imperfection was 1/32 of an inch, not 1/32 of the card width. Though the wording is ambiguous; it may be that the margin was 1/32 of an inch, in which case the imperfections within the margin were even smaller.
Yes, but we can't say nobody cheated before because they could have done it silently. All we can say is that nobody caught this method before. As for the house's motive, perhaps the hypothetical dealer is helping a confederate win in the same way as in this story, but just to a lesser amount. This also isn't the only card game this would work in.
> the imperfection was 1/32 of an inch, not 1/32 of the card width.
Right, I said it wrong but that's where I got 1/80th from. And yeah, it would be a fraction of a millimeter. But with proper technique (such as is used to check for marked backs anyways) of riffling through them, you'd see the shape move around.
I also worked in something similarly finicky and know from experience that difference is easily within normal ability to spot.
Anyways, the point is that there are two parties who are possibly hurt by marked cards - the house and its customers. The customers don't get the opportunity to inspect the game pieces so the responsibility should fall fully on the house. If they had skin in the game they'd try harder. But if they can rollback customer wins with it, it becomes a feature. Why look too hard, if at all?
Quite why he would do that is anyone's guess - trolling the casino for the lulz because he has millions of dollars he can afford to lose?
certainly Ivey and his colleague were able to utilize those patterns as if the cards had been marked, but in truth neither Ivey nor his colleague did anything to the cards at all before playing.
I think the argument comes down to spirit of the law (which Ivey broke, in my opinion) vs. letter of the law (which he didn't break, in my opinion).
if the rationale of this case stands, then every past player at Borgata and the Attorney General and dealers should sue Borgata under the New Jersey Casino Control Act
If that fails then the New Jersey Casino Control Act should be challenged on constitutional grounds of unequal application of the law
Would love to see this case moved to federal jurisdiction, no federal judge is going to take a favorable view of New Jersey State's enshrinement of casino superiority.
I'm probably missing something obvious, but why would the dealers of all people sue Borgata?
There's an interesting side story to this. While Ivey was conducting this scheme at the Borgata, a famous advantage gambler named Don Johnson happened to be there at the same time. Johnson is mostly famous for beating Atlantic City casinos out of $15M playing blackjack using their overly generous rebate policies for the highest of rollers, though he has also made hundreds of millions of dollars beating horse racing using algorithms that he paid to have created. Bloomberg did a 45 minute video on him [1] and here's a writeup if you prefer [2]. Johnson and Ivey are friends.
When Johnson walked by the high limit room and happened to see Phil playing baccarat with piles of $100,000 plaques in front of him, accompanied by a woman that he normally wouldn't be with, he immediately knew that something wasn't right. He walked up and tried to talk to Phil, who told him "it's not a good time right now". Don said "au contraire my friend, I don't know what's going on but it looks like a great time" lol. Johnson actually sat down and, figuring that Ivey knew what he was doing, copied Ivey's bets until Ivey made it known that he was serious about being alone with his companion at the table. Johnson won but was not sued or asked to return the money. Johnson told this story on an advantage gambling podcast [3].
So yes, anyone that knew anything about Phil should have instantly known that he would not be playing a negative expectation game for such high stakes without an advantage. Having heard several gaming attorneys weigh in on this issue, I do believe that the current decision in the US will be overturned, although it is unlikely that the case in London will be.
[1] https://www.youtube.com/watch?v=hJpnnaksXNM
[2] http://www.theatlantic.com/magazine/archive/2012/04/the-man-...
I mean, that's a pretty important thing to know before forming an opinion on this matter.
In essence, the part of the contract that the judge is leaning on is that any manner of manipulation, by either party, invalidates the game and any winnings that came as a result of that game.
Borgata should probably be focusing their ire at Gemaco, not at Sun. Her skill is what won this, and I hope that in the end she gets her "revenge".
It's funny -- I'm as vulnerable as anyone else to a million addictive game mechanics that build on the same impulses that make gambling addictive. But actual real-life casino slot machines just don't work. I need to be like, evaluating the loot drop's fire resistance on a new helmet or whatever for it to be addictive. When you just push a button over and over again with no actual input it's just too obvious you are doing nothing.
I've heard several reports that casinos can't get millenials to play slots, and I suspect it's because they're very unsophisticated compared to even the most basic video game.
Things have come full circle - slot machines paved the way for gamification techniques and IAP. Flashing lights, the sounds, the 'I almost won' near-misses from the big jackpot...all finely tuned to get that dopamine squirting and keep you on the machine. Very Pavlovian.
Video games (IAP in particular) are just rehashing the psychological tricks that slot machines have used for decades. Its just the games are newer and offer a bit more depth.
I'm sure in good time we'll see more advanced slot machines to entice the smartphone generation.
Certainly here in Sweden they've short-circuited that entire process by making the slot machines into smartphone apps so that you can play whenever you want without even having to leave the comfort of your own home
That's only really a modern American take on corporations, and even then, you have things like social purpose corporations.
I'm not saying this is the kind of corporation I want--on the contrary, I despise that such organizations are allowed to exist.
But saying that corporations shouldn't act immorally when they can make more money by acting immorally is like saying termites shouldn't eat wood. It's the nature of corporations to seek profit at all cost and if you don't want that, you don't want a corporation, at least in the sense that corporations exist today.
That's not how the majority of corporations exist today, nor reflects how most people believe they should operate. It's the behavior of a small percentage of large corporations, largely supported by people like you throwing their hands up and going "well, that's just the way of it!"
Expecting corporations to behave ethically is no different than expecting people to behave ethically -- and we should do the same thing about both situations, establish rules and police them. It's nothing at all like termites and wood: it's a voluntary choice made by people, not a biological imperative from an unthinking creature.
It's the policing that has collapsed, because people like you have bought the propaganda that we should accept and normalize such behavior from corportations.
Until we fix the laws, the entire point of a corporation is to diffuse legal responsibility.
Yes, it needs to change, but it can't change from the ignorant position that we're fixing leaks and will eventually have a waterproof system. It's intentionally setup to be this way and nothing short of an entire overhauling will fix it.
Similarly, the punishments doled out aren't constrained by matter of law from being effective, but rather, by the dynamic of the system and the willingness of the public to accept it from judges and prosecutors.
My point was that you've been propagandized to believe that the law permits the current system, when really the present system is likely illegal already and instead results from the lack of political will to replace corrupt government officials who enable poor corporate behavior.
The system would be much better if we actually enforced it... Which you guys refuse to demand from officials, because you've bought in to the notion that what they're doing is legal.
Right. But ...
> Which you guys refuse to demand from officials, because you've bought in to the notion that what they're doing is legal.
No. Many of us demand that but nobody listens because they know they don't have to.
Realize that making the laws unenforceable is the intent. This is what I mean by patching vs replacing. Let's say we managed to get a few hundred bankers arrested for 2008. Then what? They change the rules slightly and next time we don't.
Instead we need to repeal all limited liability for any group. That way in the future it's not us vs them, it's us vs us, which is winnable.
And I agree that's it's already illegal. But it's constitutionally illegal, we don't grant government the right to create a privileged class and yet it did. And if our ancestors were dumb enough to sign off on this, we don't have to be.
We, the people, don't have to be bound to the muck that is our common law. The government is ours to charter as we wish and if huge swaths of it aren't working they can be thrown out wholesale. If we get bogged down in trying to navigate our(!) ruleset we've already lost the game.
However, Im very interested to hear how you propose to make an economy work without limited liability.
I dont think you have anything like a plan for that, and have confused the behavior of a few large corportations with corporatioms in general, while simultaneously missing the actual social structures causing the problems you list and the benefits of corporations.
Fwiw, I'd be interested to hear how you think the current system could work if we didn't come along and bail the economy out every few years by backing these bad business debts with public money.
> corporations in general
The sole defining characteristic of a corporation is limited liability. Everything else a corporation is, is inherent it being a group of people.
Further, all benefits we enacted corporate law to provide are now handled much more directly by bankruptcy statutes and welfare. You don't have to risk everything to engage in a business anymore.
> simultaneously missing the actual social structures causing the problems you list and the benefits of corporations.
So many benefits you couldn't list them all in the space provided? You favor a system where I pay for the crimes your business commits so the burden of proof is yours.
I don't think we should accept and normalize this behavior from corporations, I think we should reject corporations as valid entities with a right to exist entirely.
Expecting corporations to behave ethically is not a reasonable expectation. Unlike individual humans, corporations only have incentives to make money.
I think policing is necessary, but it won't ever work as long as we treat corporations as capable of ethics. It should be assumed that corporations will do the wrong thing the instant it becomes profitable. Corporations should be considered guilty until proven innocent.
Most corporations manage to act ethically; corporations (big and small) have non-profit motives; and limited liability is pretty much required to have a functional economy.
Your arguments are largely about scale, locality, and control structure, and nothing about corporations per se.
Don't be sorry for labeling my position, just don't do it. If you had a defensible position you could defend it without name calling.
> Most corporations manage to act ethically;
Inasmuch as it is profitable to do so, sure. It rarely remains profitable to do so, however.
Could you point out some examples of successful corporations acting ethically when it was not profitable to do so?
> corporations (big and small) have non-profit motives
Examples?
> and limited liability is pretty much required to have a functional economy.
Is it? Iceland put their bankers in jail and recovered more quickly from the subprime mortgage crisis than anyone. Limited liability allows economies to function for the rich, but that's a rather narrow view of functioning. The stock market is not the economy.
You cannot support policing and limited liability--limited liability means that policing has no teeth.
Before I answer your question, could you define what you mean by successful? I know that sounds facetious, but I mean it seriously -- most people mean, say, Walmart when I would consider a profitable local grocer to be successful, even without growth.
Examples of not-profit driven corporations would be any of the not-for-profit entities, for starters. Then you can get in to social purpose corps, c-corps where the shareholders focus on structural stability and long-term value preservation, etc. It seems that you're limiting your idea of corporations to being large, traded on Wall St corporations -- which I agree are problematic. Where I think we disagree is on the solution: I prefer smaller, localized corporations while you want to abolish them entirely (which I think inflicts a great deal of collateral damage, taking the idea to a net negative).
Limited-liability is purely the notion that assets not given to or gained from the corporation aren't subject to covering its debts just because you own part of the corporation. It has nothing to do with shielding executives from fraud or criminal prosecution, nor shielding the corporation's assets from unlimited liability.
The reasom we didn't put bankers in jail (like we should have) is that they didnt want to allege multi-thousand person conspiracies and RICO act the banks. That's because the political will isn't there, and not because the bankers were shielded from liability. I think we should use RICO against a lot of corporate malfeasance -- the law is literally designed to go after the leaders of large criminal organizations and seize related assets.
I disagree, very sharply, that the notion of limited liability means policing has no teeth. We're merely too light in seizing corporate assets in repinse to damages (eg, fines are too small) and we're too reluctant to prosecute crimes from business executives. But neither of these has to do with limited liability.
I would also point out that in my experience, limited liability helps a TON of small businesses, who would shut down if the owner's entire assets were required to be at risk because of employees. Myself included: I wouldn't run a consultancy (of myself and one friend) if giving "bad" advice (in the determination of a questionably informed and often emotionally swayed jury) meant my entire life could be taken away. It's not worth the risk to specialize and trade services under that framework -- the risk from courtroom whims is too high. (I do support public directories of bonded professions, however. That gives the client a good idea of how much risk they should take on because of your decisions. The problem is this presents barriers to entry.)
Or is your position that I should only be allowed to offer my services under the aegis of a large firm which would prevent personal liability to me as an employee? That seems far worse and more classist than the present system, which offers the immunity to anyone with $200/year.
Even if you 100% know the odds are nowhere near your favor its possible to get pleasure from the act of putting down a bet, even if you lose. It can be a form of entertainment.
I, personally, don't get this pleasure but I can understand other people like different things than me.
Whether or not it should be legal, its additive potential is too much of a burden on society, or is ethical is a different question entirely.
Note that, according to the judge, the "fundamental purpose of legalized gambling" is for the house to always win.
Is this controversial? I assumed everyone knew that the casinos have an edge on every game they spread?
So, sure, everyone knows the house has an edge, but saying that the purpose of legalized gambling is to enrich the casino is a very different claim.
If we're being technical, shuffling actually lowers the house edge a bit if you are not counting cards, but completely restores the edge if you are trying to count cards. This happens because for each hand of blackjack it is more likely that the last card played is a high card (you are more likely to draw again on a low card), so the remaining deck is slightly lower on high cards on average if you don't shuffle compared to shuffle, and high cards are good for the player, so not shuffling is better against non-counters, but a lot worse against counters.
They most definitely have an edge on slot machines. The fact that there are at times local maxima that favours the gambler doesn't impact the overall edge. This is the same as lotteries with a carry-over jackpot etc. The jackpot is paid for by other gamblers who played against really bad edges, not the casino.
[1] http://www.nj.gov/casinos/actreg/act/docs/cca-article01.pdf
"One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you're going to wind up with an ear full of cider."
It also reminded me of Don Johnson, who saw casinos desperate for high rollers and set up a few conditions on a private Blackjack game that actually shifted the odds ever so slightly. Won $15 Million from Atlantic City's desperation or stupidity, then got to keep the money.[0]
If Ivey had chosen a game with just a little skill, he might have been able to cool the mark with some cover story about a new statistical technique and get away with it.
[0] http://webcache.googleusercontent.com/search?q=cache:PVyNBmJ...
Relevant comment from up the thread - https://news.ycombinator.com/item?id=13227643
https://www.theguardian.com/sport/2016/nov/03/poker-player-l...
http://www.flushdraw.net/news/eight-surprising-details-phil-...
The full legal judgment is available here, and may provide insight into why this activity was also ruled illegal in the USA:
https://www.888casino.com/blog/sites/default/files/ivey_croc...
This is the real wtf. Ivey could have easily used his own money to play craps, what does this have to do with ANYTHING?
That said, they agreed to the rules, they should eat the loss anyway. The government has no role in protecting businesses from their own stupidity.
The reason I don't agree with it is that the fact that the cards were printed in a manner which made it possible to do this does not mean they defrauded the casino, it means the casino shouldn't have agreed to use those cards because their security folks should have known about this issue.
(Eg Webster defines rigging as, to manipulate or control usually by deceptive or dishonest means)
" “By using cards they caused to be maneuvered in order to identify their value only to them,” the judge wrote, “Ivey and Sun adjusted the odds of Baccarat in their favor. This is in complete contravention of the fundamental purpose of legalized gambling as set forth by [New Jersey’s Casino Control Commission.] Ivey and Sun’s violation . . . constitutes a breach of their mutual obligation with Borgata to play by the rules” of the state’s law. "
That interpretation is equivalent to saying you can't do anything that improves the odds in your favor in any game. By this judge's reckoning, you have to just be a robot that sits passively and accepts all the hand exactly as dealt and not use any strategy to play the game to your advantage. That's fundamentally un-American if you ask me.
That's basically gambling. Which is exactly what the game they were playing was supposed to be. Pure chance. In fact gambling can be distilled down to that. Passively accepting your hand in the game and hoping for the best. That doesn't sound very appealing, but throw in human nature and biases and you get something quite addictive out of what is essentially a lopsided passive engagement.
That's baccarat -- the only interactivity is adjusting your bet.
That is insanely impressive. Anyone have an example of what these look like?
[1] https://www.888casino.com/blog/baccarat-tips/edge-sorting-in...
I don't know the name of the trick but I learnt it as a child.
Once that's done, Ms. Sun's criminal record would be easy to track down. Inquiry to figure out what she had in her cell with her.
Then it's a matter of asking them, under oath, to confirm these conclusions. They either have to plead the 5th (which I don't think one can in England) or acknowledge what they did.
A good casino lawyer and investigator could get 90% of this.
At the end of the day, it works out to spending money for entertainment, the same as any other night out.
Roulette is fantastic for answering questions like "Do I have a $50 meal or a $200 meal?" Simple: just place $50 on a column or dozen. Bam! Your cashflow is more or less randomly distributed instead of at a flat rate, for a 5% loss. Ignoring the casino's slight edge, you can see it's shifting money -- each of 3 days, you have $100, totalling $300; on a large number of games, you'll win 1 for every 2 you lose, so you'll have 2 days where you lose $50 and 1 day where you win $100. With the casino's edge factored in, you turn a consistent $300 in to a bursty $292.
Works for basically any time you're wanting to turn a flat, planned cashflow into a dramatic bursty cashflow.
Ed: maths is hard; fixed expected value. Accidentally applied casino's edge to total cash instead of just portion gambled.
You're looking at it wrong then. 1) Going to the casino isn't looked at as a profitable job, it's entertainment. You can pay to see a concert, go to a bar, or in this case (maybe) pay to have some excitement 2) Free rooms are very common 3) Free drinks are standard
Instead of going to a bar and paying $8/drink, the drinks are free while you are gambling. That alone makes it "beyond belief" that anyone would go to a bar no?
This. I'd much rather sit at a cheapo blackjack table and chat with my friends for a couple hours than go scream at each other in a bar or dance club.
I think that the situation is maybe slightly more complicated than it seems at first glance.
To those who didn't read the article: the backs of the cards were not perfectly symmetrical, so by asking the dealer to rotate the cards so that some were oriented one way, and some were oriented the other, eventually they were able to get themselves an advantage by knowing some data about the value of those cards before they were flipped.
Although I guess if everyone knew about this asymmetry (both casino and player), then perhaps observing it would just become a part of the skill aspect of the game?
Really interesting!
I'm not 100% sure, but I'm fairly certain that this is true for every casino card game. As the casino is handling the cards the games are designed such that the card handlers can gain no edge by surreptitious looking at the value of face down cards.
That's because the casino is supposed to tell you what they're doing. A casino making decisions based on secret criteria is very abnormal. But the player almost always does so.
A lot of people seem angry that the odds are always in favor of the casino, and comment in a way that implies that if you gamble with odds against you, you are definitely going to lose money. This is not the case at all, and typical casino odds mean that in a single event, your chance of a net win is close to your chance of a loss.
I keep reading here that there is no shame in business making money, so how else would that work for the gambling industry?
As for their card trick, they both knew very well what they were doing, that is was at best immoral if not illegal. What if it had been a scheme to defraud a tech company? Using a weakness in the system to extract millions? Would we read "too bad, they should eat that loss and take it as an opportunity to improve their process"?
It would work by denying Ivey his requests and policing your games properly, as many casinos did do. Ivey isn't exactly an unknown in gambling circles - the Bogota went in eyes open, accepted the conditions and lost.
> As for their card trick, they both knew very well what they were doing, that is was at best immoral if not illegal.
There is no shame in doing anything within your abilities and the law to take money away from a business either.
As for their card trick, the casino agreed to all their demands and took the risk that something was going on they did not understand, with the expectation to take money from individuals in a way (gambling) that is at best immoral.
You may see what I did there.
For me it works both ways. Neither side can claim the moral high ground in this game they both agreed to enter - the only thing that stands out to me is that the side that isn't used to losing, lost.
Remember when the Ethereum DAO got hacked? I seem to recall a lot of people making that exact argument.
If the casino allows the players to perform arbitrary actions within the limits of the rules in order to try and improve their luck I fail to see how Ivey and Sun can be considered to have defrauded the casino by performing their selected and previously agreed actions.
So that means you disagree with the judge?
>I keep reading here that there is no shame in business making money, so how else would that work for the gambling industry?
If we ignore addiction, there's no shame in running a casino. But if you play with fire and 100% agree to something with full competency, don't complain when you get burned.
>What if it had been a scheme to defraud a tech company?
Then that would be fraud. This isn't.
>Using a weakness in the system to extract millions?
When the weakness is condoned by someone that should know better, and they agree to it over and over again, and the terms of the agreement are honestly being followed, then yes they should suck it up and fix their process for the future.
Like, for example, making alcohol available?
So anyway, here it is:
If the casino noticed the player tended to lose more given some situation and the casino created a circumstance for that situation to occur more often.
And that's the punchline. Right? It's like some kind of self-referential / tautological definition of a casino.
To belabour the point: We noticed people tend to lose more money if we build casinos.
My work here is done.
"SEPT. 10, 12:30 P.M., CASINO DE MONTREAL "Hi, this is Phil Ivey," he says into his phone, from the back of a limo sent by Casino de Montreal. "I need you to transfer $1 million from my account, please."
There is no self-consciousness, no hint of understanding that the rest of the world doesn't make requests like this. "I know it's a lot of money, but I like to gamble," Ivey says. "It's just in me. I try to manage what I do playing craps or blackjack. At the end of the year, I don't want the amount I gamble there to be bigger than what I win playing poker.""
http://www.espn.com/espn/magazine/archives/news/story?page=m...
One - Ivy got greedy. Had it make it appear as though he was losing some of the games, he probably would've gotten away with it. If you lose, then win, then lose and are up at the end of the night, it's more plausible you weren't cheating. The way all of the articles I've read about it, he basically ran the table for several hours and then left.
Two - you go into any casino and use card counting techniques (like the ones the MIT team used) and within ten minutes, the pit boss will cut you off because its obvious what you're doing. This is the very same technique Ivy was using. Lowering his bets when the cards were low, then increasing his bets when the cards were favorable. I'm actually pretty shocked the casino let him play for so long when it was so obvious what was happening.
This is what surprised me as well. I can understand them accepting he's doing something and trying to figure out what it is, but to let him go for that long? Perhaps it had something to do with the private room, etc?
When I was a blackjack dealer we had people counting cards all the time. Most were very easy to spot and were touristing. They never got harassed, but when you got one you would usually chase him away because for some reason they were really bad tippers. (chase them away by making them uncomfortable, not by asking them to leave)
Occasionally you'd get a grinder - guys that do it for a living and rotate between casinos before they wear out their welcome. They were fine too in small doses. The ones I recognized were sociable and had a system for tipping just like they had for everything else.
Guys like Ivy/Johnson... never ran into one. If this had happened in my day, a trip to the desert would have been an option.
When you play cards 5 hours a day with 2 1/2 hours of breaks there is a lot of opportunity to think about how to maximize your tips.
The real question for me is: Why does a Casino use card patterns that are not symmetrical?
Considering how much resource is invested to make sure everything else is as precise as possible, this seems suspicious / unusual.
If you are going to not cheat like those guys - quit while you are ahead.
The standard deviation of this is fairly large though so that the chance of this happening is very small but nevertheless it isn't zero and what you lose is more than you can expect to win. As sleepychu mentioned, the amount you bet goes up exponentially ($1M after 20 rounds).
Aside: It is sometimes said that in order to do this "double when you lose" strategy, you need to e.g. "stick to red for the entire run". This is false. If I bet red-red-red-...-red-red I am just as likely to win/lose as when I bet red-black-odd-odd-even-...-red
[0] https://en.wikipedia.org/wiki/Martingale_%28betting_system%2...
If you have an edge, what you want is for a bunch of little guys to bet against you. Your certainty of winning against a million little bets is enormous, if you have an edge. And you do, because those games are made that way.
What you don't want to do is bet a few big bets. You might be smarter than me at guessing the outcome of an election, or a coin toss, or any other event, but if there's only one, you may very well still lose.
If you have a few huge fish, there's almost no point in having the little ones. Your outcome depends on the huge bets.
It's not just casinos who don't know this. I had a friend at a hedge fund complaining to me that he was allowed to risk ~1MM USD/bp on interest rates, but he sat next to a guy who was allowed ~50MM USD/bp. So everyone's bonus depended on the big guy, and everyone else might as well just not be there.
It's possible the casino simply considers the gambler's risk-of-ruin stop to be sufficiently close that they'll mostly hit that stop.
They're a low percentage, but those casinos have thousands of rooms so if even 5% of people are whales it's a sizable number.
The problem is there's a really uneven distribution. They probably get 50% of the wagers from 1% of the gamblers. But they still have enough whales that they rarely have a losing day.
If indeed a whale was betting 100 million on black or red at roulette, and the total bankroll of the casino was 500 million.. it would be very easy for the casino to go under.
But if the max bet on a spin of roulette is 1 million dollars, and the casino has 1 billion dollar bankroll.. you can do the math of the odds of a whale busting the casino. Hint: It does not look good
Your issue is how to spend less on marketing and entertainment than what you get from winnings, because there's competing casinos as well.
I suspect what's happened is there's some guy in the casino who actually does know how the numbers work, they just get overruled by an eager manager who is optimizing a different schedule.