Edge sorting: Phil Ivey loses

I doubt these backers did not know about the borgata issue.

That being said I doubt they did not back Ivey with full confidence of the law that they could collect their winnings without Borgata having legal claim to them.

Quote: DRich

I guess I look at it a little differently. Ivey was the contestant that won the money. The money was to be paid to Ivey and then Ivey was responsible for paying the backers. The backers could not have collected the money directly from the WSOP. Ivey had to collect it, My only real point is that it is Ivey that owes the backers and it shouldn't matter whether or not he collects it. The agreement was for a percentage of the winnings and Ivey did have those winnings even if he didn't collect it.

If that is how the law is applied then backing of poker players would end

Backers would be forced to do background checks on garnishment and other liabilities EVERY TIME they staked which I dont see happening

The end result if any backer can have his money garnished by his backee previous legal debt would be for backer to (pardon the pun) back off from any and all such deals.

But these backers I am sure researched the law and felt comfortable if such as this situation arose.

Something tells me the backers are going to prevail based on state backing laws

Personally if I was the Borgata I would just concede.

Then,

Stake holders are happy at staking Ivey

Ivey gets to freeroll his way out of debt.

The Borgata gets back all their money because Ivey keeps playing even though its in smaller drips and drabs.

But of course stupid Borgata will try to keep the entire $125,000.

Then no one will stake Ivey going forward and the Borgata can kiss their edge sorting judgement goodbye

Quote: darkoz

If that is how the law is applied then backing of poker players would end

Backers would be forced to do background checks on garnishment and other liabilities EVERY TIME they staked which I dont see happening

I think most general investment advice would be to research your investment -- so it doesn't sound too crazy to me as a general principle regardless of what the investment opportunity is about.

Quote: rxwine

I think most general investment advice would be to research your investment -- so it doesn't sound too crazy to me as a general principle regardless of what the investment opportunity is about.

I actually agree with you.

As I stated above, its impossible the backers didnt know about the situation

Which implies to me that they DID research their investment and came to the conclusion they were legally protected from this

This could get interesting, couple things to add.

Trincher and Cates are regular high limit cash game players- unknown if "winning" players
Backing is extremely common within the circle of people who populate the highest level games, it is not unusual
for multiple players in a game to be staked by another player at the same table. Either they do not have the cash on hand and are fronted their buy ins, or a myriad of other possible scenarios.

A fun twist would be for Borgata to employ Ivey at a fixed hourly income plus incentives based on tournament cash outs. Borgata could front the entry fees as a corporate entity with Ivey as their representative. A legal contract could be worked out.

Quote: beachbumbabs

Does a player actually receive the full payout on something like this, or do they take federal taxes out? If they take taxes, is it only on the amount above the buy-in, or the whole cash? I'm wondering how much rhe Borgata actually got when they garnished his "wages".

Garnishments from a paycheck are after taxes are deducted. I don’t know how it works if tax withholding a aren’t required, but the full winnings will count as taxable income of Ivy despite the garnishment.

I don’t see why people think the backers are getting screwed. If they have a valid backing contract with Ivy, then still owes them the money. He’s just out of pocket for it since the garnishment creditor takes priority over an unsecured creditor.

Quote: unJon

Garnishments from a paycheck are after taxes are deducted. I don’t know how it works if tax withholding a aren’t required, but the full winnings will count as taxable income of Ivy despite the garnishment.

I don’t see why people think the backers are getting screwed. If they have a valid backing contract with Ivy, then still owes them the money. He’s just out of pocket for it since the garnishment creditor takes priority over an unsecured creditor.

My question is, there's an entry fee. You can't count as winnings getting the fee back, so how can Borgata take back the replacement of the entry fee? The IRS acknowledges that, so why wouldn't Borgata only be able to garnish the amount over the 50k?

An argument could be made, that given 80%+ lose the entry fee,
This is then forfeit in the pursuit of entertainment.
Therefore all proceeds are profit.

I still want to know if you were an employee I'm some company if they could then still confiscate the money? I see no difference between winning at poker tournament for an employee VS selling a product for a company. As far as I'm concerned they're only entitled to whatever Commission or profit that person earned from the sale or Tournament winnings.

Quote: AxelWolf

I still want to know if you were an employee I'm some company if they could then still confiscate the money? I see no difference between winning at poker tournament for an employee VS selling a product for a company. As far as I'm concerned they're only entitled to whatever Commission or profit that person earned from the sale or Tournament winnings.

Its just not a simple answer.

An employee most certainly could have his wages garnished, yes.

There are legal restrictions to how much. For example, garnishment for public assistance owed is usually set to 50% of check after taxes each check till paid off. I think back child support is 60 or 75% . Back taxes might be 100% Different states may have different laws for the local garnished wages.

BUT this is not a simple employee case.

How many employees have to fork over $50,000 in order to have their job?

That would be more comparable to an LLC situation where individual investors join forces temporarily with certain legal protections. And LLC protection is pretty strict which is why they are popular.

One could also look at this as a loan scenario. However I dont believe so. There were no interest payments to be made and no payment requirements if Ivey lost. That does not qualify as a loan in my book.

Clearly the money was handed over due to Iveys skillset. So basically they were purchasing or paying a wage to an employee to obtain a skillset they believed would turn a profit.

And if you look at it like that, then ONLY the wages paid to an employee would be garnished.

For ex. If you stsrted a company for $50,000 by giving it to an IT guy to build a website and website returned s profit of $125,000, and the IT guy got a percentage deal,, I think everyone on here would agree only his profit percentage should be garnished. NOT ALL the profits including the initial investment return.

Quote: beachbumbabs

My question is, there's an entry fee. You can't count as winnings getting the fee back, so how can Borgata take back the replacement of the entry fee? The IRS acknowledges that, so why wouldn't Borgata only be able to garnish the amount over the 50k?

Borgata’s claim wasn’t to Ivy’s winning but to Ivy’s assets. So they had a claim to Ivy’s buyin even before he gave it to Borgata. That someone loaned him that buy in just means that Ivy owes more money to more people.

Quote: AxelWolf

I still want to know if you were an employee I'm some company if they could then still confiscate the money? I see no difference between winning at poker tournament for an employee VS selling a product for a company. As far as I'm concerned they're only entitled to whatever Commission or profit that person earned from the sale or Tournament winnings.

Here’s the distinction. An employee selling a product earns just a commission. The company he sells for gets the revenue. The customer writes a check to the company not the salesman.

Here, Borgata owed Ivy the whole amount of money. Borgata didn’t owe the backers anything.

Make sense?

In theory a casino could recognize backing relationships and step into the middle of them, so that the casino would agree to owe the backers directly (in addition to Ivy). We’re that to happen, then the backers wouldn’t be unhappy creditors of Ivy. They would be paid creditors of the casino.

Quote: AxelWolf

I still want to know if you were an employee I'm some company if they could then still confiscate the money? I see no difference between winning at poker tournament for an employee VS selling a product for a company. As far as I'm concerned they're only entitled to whatever Commission or profit that person earned from the sale or Tournament winnings.

Yes, they could garnish your wages. That is very common incollection of debts.

Quote: DRich

Yes, they could garnish your wages. That is very common incollection of debts.

Yes, I completely understand that they can garnish people's wages

They should only be able to take whatever his cut is supposed to be, minus the investment.

I understand in this situation it seems a little fuzzy. But moving forward, if it becomes an employee at some company or whatever... would they still be able to confiscate anything above his actual wages/earrings? They certainly shouldn't be allowed to.

Quote: AxelWolf

Yes, I completely understand that they can garnish people's wages

They should only be able to take whatever his cut is supposed to be, minus the investment.

I understand in this situation it seems a little fuzzy. But moving forward, if it becomes an employee at some company or whatever... would they still be able to confiscate anything above his actual wages/earrings? They certainly shouldn't be allowed to.

No, they would not. (They could get financially penalized for not complying but thats different)

I think the fuzziness here is who was Iveys employer?

WSOP or the backers.

DRich is arguing Ivey had the deal to play as a contestant with WSOP. Therefore they are his employer and the backers are an independent creditor

The Backers are claiming they are his employer in essence by hiring him to enter the WSOP, financing him with their cash and a predetermined salary (percentage of success) as wages.

Most likely existing laws defining the rights of backers in staked games will probably make the case go one way or the other

Quote: AxelWolf

Yes, I completely understand that they can garnish people's wages

They should only be able to take whatever his cut is supposed to be, minus the investment.

I understand in this situation it seems a little fuzzy. But moving forward, if it becomes an employee at some company or whatever... would they still be able to confiscate anything above his actual wages/earrings? They certainly shouldn't be allowed to.

Only if the casino hosting the poker event let the “company or whatever” enter the event so it owed Ivy’s winnings to the company or whatever instead of Ivy.

Quote: unJon

Only if the casino hosting the poker event let the “company or whatever” enter the event so it owed Ivy’s winnings to the company or whatever instead of Ivy.

I dont think its that cut and dried.

Otherwise there would be no merit to the court case.

I know you feel there is no merit

But the high powered attorneys representing the backers dont feel that way.

Apparently they are not some small outfit but top gaming attorneys in Nevada. According to the article

Quote: darkoz

I dont think its that cut and dried.

Otherwise there would be no merit to the court case.

I know you feel there is no merit

But the high powered attorneys representing the backers dont feel that way.

Apparently they are not some small outfit but top gaming attorneys in Nevada. According to the article

I was responding to Axel’s specific question about how you could garnish proof a backing arrangement by turning it into an employer/employee relationship.

The current dispute is one of the priority between two creditors. One with a judgment and garnishment order from Nevada vs one with the protection of the Nevada law protecting backers. It’s an interesting one, but I do think that the backers are unlikely to win. They have a long putt to make.

I say that without being a Nevada lawyer or having done research into Nevada law in these points. So I could be wrong. I say it only from my general knowledge of how creditor priorities tend to work (that’s something I know quite a bit about).

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