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US Poker Player overturns Ghosh Test

One of the world’s top poker players, Phil Ivey has lost his Supreme Court appeal against Genting Casinos in which he averred he was entitled to £7.7 million in winnings which the casino has been holding for five years. In a ruling which has changed the law, the five-judge bench in Ivey v Genting Casinos UK Ltd t/a Crockfords [2017] UKSC 67, decided that the US professional Poker Player had been cheating and, that his conduct, contrary to his own opinion, was dishonest.

Phil Ivey had used a technique called ‘edge-sorting’ while playing Punto Banco Baccarat at the casino in 2012. Over the course of 2 days, he won £7.7 million. The casino refused to pay, claiming he had been cheating. Mr Ivey denied cheating and claimed to have deployed a ‘perfectly legitimate advantage’.

The appeal was heard before Lord Neuberger, Lady Hale, Lord Kerr, Lord Hughes and Lord Thomas.

The court was asked to consider “(1) the meaning of the concept of cheating at gambling, (2) the relevance to it of dishonesty, and (3) the proper test for dishonesty if such is an essential element of cheating.

In consideration of the proper test for dishonesty, the court was required to specifically consider the second part of a bipartite test applied for dishonesty in our law which was set down in the R v Ghosh [1982] QB 1053. The first part of the test is whether the conduct was dishonest to the objective standards of ordinary and reasonable people. The second part of the Ghosh test is whether the defendant must have realised that ordinary, honest people would regard his behaviour as dishonest. It is subjective, relating to the defendant’s state of mind.

Lord Hughes, in delivering the unanimous decision of the court, took the view that the Ghosh test had a number of flaws and could produce some unintended consequences. The judgement also acknowledged that without a decision of the Supreme Court, all courts would be bound to continue to direct a jury in accordance with Ghosh.

At para 74, Lord Hughes states,

“These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes: see para 62 above. When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”

In conclusion, the appeal was dismissed with the acknowledgement that Mr Ivey may have been truthful in asserting he was not cheating but the court was satisfied that his conduct, contrary to his opinion, was indeed dishonest.

Mark Kelly Fraud Barrister in London, UK

My professional experience, approachability and considerable expertise means that you will be in a very safe pair of hands when it comes to your defence, and my track record is second to none. I consistently obtain favourable results for clients accused of a variety of sexual offences, fraud and financial and regulatory cases.

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