The recent news that Britain's High Court ruled against Phil Ivey in his case of a casino improperly withholding his winnings once again highlights the question of advantage play versus cheating.
Earlier this year, news surfaced that actor Ben Affleck had gotten banned from the Hard Rock Casino for card counting. While exciting because Affleck is a big star, this story is really a yawner in the lens of this discussion. As a private property, the Hard Rock has the right to refuse service (in this case, blackjack) to any patron as long as they aren't discriminating based on a protective class. And no, card counters are not a protected class.
Recently, the story of two gamblers finding a glitch in video poker became all the rage on social media. They discovered a sequence of button-pushing on the video poker machines that would allow them to win to the tune of millions of dollars. They also were sued by the casinos.
In July, the news of Ivey's case started circulating. In 2012, Ivey created a favorable situation for himself by making certain requests of the casino. He asked for three things: a specific brand of cards (Gemaco), a dealer who spoke Mandarin, and an automatic shuffler. The casino was more than happy to supply all three. With these details in his favor, Ivey was able to read the manufacturer's markings on the cards and win millions from two casinos playing baccarat.
All three cases are different but they share one theme: smart people working hard to take advantage of a loophole in a system. But the bigger questions are: Were their actions illegal? And if not, were they unethical? Where is the line?
I'm not a lawyer, so I don't want to dwell on the legal question. I know that the issue of card counting has been heard in the U.S. Supreme Court and it's considered legal. That is why you can't get arrested for card counting, but they can kick you out of their casino and tell you to never come back. As far as Ivey's "edge sorting" and the video poker hack, I'll leave the legality to the lawyers. Instead, let's discuss the ethics of both of these tactics.
First off, realize that we aren't discussing all types of gambling; we are instead limiting this discussion to casino gambling involving the player versus the house.
It's important to make this distinction because it helps set the implied rules of this interaction -- casinos are not in the businesses of fair play. Gambling has been called -- fairly -- a tax on the dumb. Casinos create games that are unfair and work hard to make sure that those games are as unfair as they can be while still feeling fair. In short, they prey on our human biases.
For example, it's widely known that humans have a hard time distinguishing the difference between bad odds and terrible odds. That's why long shots in horse racing, placing the number in roulette and betting the hard ways in craps are all terrible bets. Yet we make those bets because the odds sound great. Odds of 30-to-1? A chance to turn $10 into $300? It seems too good to pass up.
However, no one should feel extreme sympathy for losing gamblers. In all cases, they have no one to blame but themselves, as they could have walked away at any time. They are complicit in this transaction.
But casinos also have an obligation in this agreement. They get to create the game and set the rules -- all the rules. They can refuse service to you. They can kick you out. They can change the rules of the game. They have all the power. What they don't ever say explicitly is that in their minds part of this agreement is that you (the gambler) will lose. So when someone figures out how to beat the game that they created, how can that be unethical?
But casinos also have an obligation in this agreement. They get to create the game and set the rules -- all of the rules. They can refuse service to you. They can kick you out. They can change the rules of the game. They have all the power. What they don't ever say explicitly is that in their minds, part of this agreement is that you (the gambler) will lose.
So when someone figures out how to beat the game that they created, how can that be unethical?
If the gambler does something to break the implied agreement, it could be considered unethical. An example of that would be having a dealer cheat on the player's behalf or a player bringing loaded dice onto a craps table. In both of these cases, the player has violated an implied covenant of information symmetry between player and house.
In my experiences as a card counter, we did many things to try and gain an advantage that could certainly be seen as subterfuge. We played as a team, though pretended not to know each other. We would wear disguises and create personas that made us more believable as high rollers. We would look for dealers who had tendencies that would be advantageous to us. Details like where they placed the cut card (the yellow card that tells them when to shuffle) in the shoe, how they shuffled, whether they exposed the back card -- that all could give us small advantages that in time added up.
I really see very little difference between what Ivey did and what we did. The only real difference is that Ivey "requested" these ideal conditions. If he had simply traveled the world to opportunistically find a casino with all of these favorable conditions, would people feel differently about his actions?
At one point during our run, some team members suggested using a handheld computer in the casino to increase our advantage. For me, this was clearly crossing the line. It was both illegal and unethical. I don't think Ivey's actions were close to this line.
In both the Ivey and video poker case, the casinos had full knowledge of the player's actions and requests. While Ivey certainly relied on deception, the casino had every opportunity to evaluate his actions. And similarly, every button push at the video poker machine was made in the open and could be analyzed.
You might think about either case and say that the gamblers had an obligation to fully disclose their actions, but that would be like saying casinos have the obligation to explain to you how unfair their games are. Imagine if the gaming officials required the casinos to disclose at every table what the real odds of each bet was and how much advantage the casinos had on each bet -- I don't think that would be too good for business. In fact, I once had a casino executive tell me that losing money was the cost of the entertainment that the casino provides.
Casinos rely on deceiving their customers. They give you free drinks, shine bright, colorful lights at you and show you big jackpots, all to convince you that winning is possible and to keep you gambling.
Yet astute gamblers can do their own analysis and decide not to bet the hard eight or the red in roulette. Similarly, an astute casino executive can refuse to use the specific brand of cards that Ivey requested, or choose to hire a programmer to debug the code in their video poker game.
Simply put, "buyer beware" applies to both the gambler and the casino.