By Robert A. Loeb, Attorney at Law
(From Blackjack Forum XX #1, Spring 2000)
© Blackjack Forum 2000
On March 9, the Nevada Supreme Court ruled in favor of a card counter and ordered the return to him of $40,400 in winnings which had been seized when a casino discovered that he had used false identification at the blackjack table.
This is an extremely important case, because there are very few decisions from the Nevada Supreme Court that affect counters, and because it deals with many important issues related to card counting.
Ultimately, the court found that the player did not commit fraud, because he had not cheated in the play of the game, and so the court ordered that the seized chips be returned to him.
The Legal Facts of the Card Counting Case
In order to analyze what the case means and doesn’t mean, we have to go back, look at the facts, and review what happened at the blackjack table, at the cashier, at the gaming board and in the lower court.
Card counter Richard Chen bought in for $29,000 at a blackjack table at the Monte Carlo casino in Las Vegas in April, 1997. As a known card counter, his picture was already in the Griffin book, so when the casino asked for identification (presumably to fill out a cash transaction report, as required by the government), Chen presented a purported passport from Burma (which does not exist anymore) in another name. Later that evening he bought in for an additional $15,000, but no identification was requested at that time.
Chen then played blackjack, apparently for several hours. At some point, pit supervisor Dave Schugar recognized him as a card counter, stopped Chen from playing more, and asked Chen to accompany him to the cashier to cash out. At the cashier, Chen produced $84,400 in chips, and when asked for identification, produced the same false passport.
Schugar noticed the irregularity and notified casino security and the Gaming Control Board.
Chen admitted to Carl Vidano, the Gaming Board agent, that the passport was false; he provided his true identity and the casino filled out a corrected cash transaction report (the Nevada 6A version of a CTR). Vidano directed the Monte Carlo to retain the chips and to give Chen a receipt for the full $84,400, pending a review of surveillance tapes and a criminal investigation.
A few days later, the Monte Carlo informed Vidano that the tapes showed card counting but no cheating. Vidano directed the Monte Carlo to release the money to Chen, and the casino refused. Vidano initiated a patron dispute case and issued a formal decision directing Monte Carlo to pay Chen the $84,400. The casino again refused, and appealed the agent’s decision to the full Nevada Gaming Board. Vidano did note that Chen did not commit any criminal violation, other than the misdemeanor crime of possession of false identification.
Three months later, the casino returned $44,000 to Chen (the total of the buy-ins), leaving the $40,400 in winnings as the subject of the dispute before the gaming board.
On the Legality of Card Counting: The Gaming Board and Lower Court Decisions
After hearing the evidence, the Nevada State Gaming Board ruled in favor of the Monte Carlo, allowing it to retain Chen’s winnings.
The hearing examiner felt that both parties agreed that had Chen provided his true identity, he would not have been allowed to play, although, I think it would have been more accurate to say that Chen could have begun playing; his session just wouldn’t have lasted as long.
The Gaming Control Board found that Chen’s use of false identification was a fraudulent act to gain admittance to the blackjack game. The Gaming Board also found that if Chen had provided his true identity, he would not have been allowed to play.
The District Court in Las Vegas considered the briefs and arguments of both sides, and it upheld the Gaming Board’s decision to allow the Monte Carlo to seize and retain the winnings. Chen appealed the case to the Nevada Supreme Court.
The Player’s Side of the Case
The Nevada Supreme Court is a court of review. This means that, like most appellate courts, it does not hear testimony or substitute its own view of the facts of the case. Its job is to accept the testimony given in the lower courts and determine if any legal mistakes were made, such as improper admission of evidence or erroneous legal conclusion.
In this case, the primary issues were whether or not the District Court made a mistake in reaching its conclusion that the casino had the legal authority to confiscate the chips, and whether Chen had committed fraud in acquiring the chips.
Chen’s contentions are contained in the brief which his attorney (John Hawley) filed with the Nevada Supreme Court. They took the position that no law or administrative rule gave a casino the legal right to seize and confiscate chips in this manner, and pointed out that Agent Vidano agreed that there was no such statute or regulation to authorize impounding the chips by either the casino or by the Gaming Board.
Chen and Hawley also took the position that the profits resulted not from the use of the false passport, but rather from Chen’s legal blackjack play according to the rules set by the Monte Carlo. Finally, they pointed out that a CTR is not a prerequisite to playing blackjack.
The Casino’s Side of the Case on the Legality of Card Counting
In the brief filed by the Monte Carlo, the casino framed the issues in different and perhaps chilling terms.
The casino stated that the issues were: “Whether a gambler can present false identification under a false name in order to play blackjack? and Does the Nevada State Gaming Control Board have the authority to use common law principles to protect the integrity of gaming in Nevada?”
If the Nevada Supreme Court had ruled in the casino’s favor on the first issue, casinos would be allowed to compel legal identification from any player.
If the Court had adopted the casino’s argument in the second issue, it would be fraud to give the casino a false identification, allowing for the seizure of profits after detecting a fake ID.
In the absence of a statute or rule authorizing confiscation of chips, the Monte Carlo was asking the Court to rule that the commission of common law fraud gave the casino such authority.
The casino’s choice of words in its brief is interesting. For instance, the Monte Carlo claimed that Chen “is a self-admitted card counter.” (What a humiliating admission to make!)
The Monte Carlo then describes his play as “he would observe a blackjack game for a few minutes, then begin to play and bet heavily and win several hands in a row…This style of play is consistent with the techniques employed by card counters.” (If only it was that easy!)
Finally, the Monte Carlo would characterize Chen’s winnings as unjust enrichment because of the use of the false passport.The casino made its case by claiming that the commission of fraud would allow for confiscation even without a specific statute or rule, and that Chen’s actions constituted fraud.
The elements of fraud are discussed in the next section. The Monte Carlo’s brief ends by asking that the Nevada Supreme Court “send a message to casino patrons that the use of any type of fake identification when engaging in legal wagers will not be condoned.”
The Decision: Why Fraud Was Not Proven
While this case was pending, I feared that it had the potential to be the most catastrophic court finding ever for card counters.
That is because if this decision had gone the other way, it had the potential to allow the casino to seize the profits of a card counter using an alias but to let the player lose at his own risk. In other words, the casino could let that counter play; if he won, the casino would seize the chips he had won. If he lost, the casino would certainly not return any money to him. There would be no risk to the casino.
Conceivably, it might even apply to players who had been previously backed off under one name, played later under a different name, but never even used false identification.
It was with a great deal of trepidation that I awaited the decision in this case. The court noted that to establish fraud, the Monte Carlo had to show that (a) Chen provided a false representation of a material fact, which he knew to be false; (b) that Chen intended the Monte Carlo to rely on the misrepresentation; (c) that the that the Monte Carlo detrimentally relied on the misrepresentation; and (d) that the misrepresentation proximately caused damages.
It is pretty clear that Chen in producing the fake passport, provided a false representation of a fact which he knew to be false; that representation was material when made in that it helped provide him the opportunity to play. It can easily be inferred that Chen intended that the Monte Carlo relied on that misrepresentation. Thus, as the court found, the Monte Carlo successfully proved the elements in (a) and (b).
But the court found that the Monte Carlo did not prove element (c), that the casino detrimentally relied on the misrepresentation. The identification requirement was to comply with Regulation 6A dealing with the government requirement of cash transaction reports; the identification requirement was not a prerequisite to the purchase of chips.
In addition, the casino had no policy instructing casino employees to cross-check the player’s id with a list of counters who might not be allowed to play. If the casino had such a policy, and had taken that step in this case, then element (c) would have been proved, according to the court.
The most important element in this case was (d), and the court perceptively found that the false passport was not the proximate cause of Chen’s winnings. The court stated, “The false identification allowed Chen to receive $44,000 in chips, but it did not cause Chen to win. Thus, we hold that the Gaming Control Board’s determination that Chen committed fraud is contrary to law because the Monte Carlo did not establish all of the elements of fraud.”
Other Observations of the Case on the Legality of Card Counting
The issue of the legality of tendering a false identification was not before the court, and accordingly, the decision does not deal with that issue.
Instead, the court was deciding whether the seizure of the chips was proper or not.
No police agency brought a criminal charge dealing with the false identification, and the court did not discuss that aspect. It would be wrong for a player to conclude from this decision that the use of false identification is legal just because no charges were brought.
It is important to note that since March 9 when the decision came out, Hell has not frozen over, and there have been no sightings of flying cows. Both of these phenomena had been predicted to occur before the Nevada Supreme Court would ever rule in favor of a card counter, but the predictions were wrong.
Additionally, this case was not a slam dunk for the player, in that the casino came close to establishing the legal elements of fraud. But a different decision may have even been detrimental to Nevada casinos, because it could have given the appearance that Nevada games are rigged in favor of the casino, an image that would have been far more costly to the casinos than the $44,000 which was at issue.
In any event, a player-friendly decision from the Nevada court system is worthy of recognition.
Finally, a different decision in this case could have given semi-official status to the Griffin book. If the use of an identity different from that which was in the Griffin book had been found to be fraudulent, then Griffin book entries would gain the imprimatur of law enforcement to the point where it would be considered fraud to give identification different from that in a Griffin book, regardless of Griffin’s accuracy. This might have been a longshot, but it was not impossible that a court would so find.
Implicit in the decision is that the legality of counting cards is again recognized. It’s not that there was any question as to that issue, but it’s reassuring to see that reaffirmed.
Three justices of the Nevada Supreme Court recused themselves from the case; this means that they did not participate. Three justices joined in the decision.
The final justice (Maupin) disagreed with the decision, and wrote that “neither card counting nor the use of a legal subterfuge such as a disguise to gain access to this table game is illegal under Nevada law. I conclude, however, that the misrepresentation here, the use of a fraudulent passport for identification, was not a legal subterfuge and enabled [Chen] access to high stakes play for the purpose of frustrating legitimate attempts by [Monte Carlo] to prevent this from occurring.” ♠
Never miss another post