An Arab billionaire gambler known as the “Fat Man” won his High Court battle yesterday over £2 million lost in a night of blackjack at a prestigious London casino.

In a damaging judgment, Aspinall’s Club in Mayfair was found by Mr Justice Teare to have given illegal credit to Fouad al-Zayat in the hope that he would carry on gambling while trying to pay off his debt. That breach of Gaming Act principles meant the club failed in its attempt to recoup the money lost by the colourful businessman, who bounced the £2 million cheque after a row over a croupier.

The case shed light on the world of the finest London casinos and their peculiar mutual dependency, with high-rolling clients known in the trade as “whales”.

The court was told that other casinos had done similar deals and that it was standard practice to make arrangements for defaulting players to pay off instalments of debt while continuing to game, but Mr al-Zayat’s lawyer, Julian Spalter of Quastel Midgen, said: “Aspinall’s have received a bloody nose. They should have seen it coming.”

The dispute began on March 10, 2000, when Mr al-Zayat, who made his fortune in the aviation field, had a bad night at the tables at the Mayfair club. He bought his first chips at 5.20pm and was still desperately buying more at 3.18am. He staked £2 million, paid for with an undated cheque, but lost it all.

The following day he wrote to the club complaining about a croupier and saying it had not been a “fair game”. Aspinall’s presented the cheque but it was refused by the bank, on the punter’s instructions.

The club began delicate negotiations with Mr al-Zayat about repaying the £2 million. In February 2001 Mr al-Zayat told James Osborne, Aspinall’s managing director, that he was going through “a financial low”. He asked the club to allow him a year to pay, during which time he would continue to play the tables and make repayments from the winnings.

Mr Osborne agreed.

“It was one of those offers that we really have not got much choice,” Mr Osborne told the High Court. “We were not being really asked, we were being told.” But nothing was repaid.

Aspinall’s was not the only casino worried about Mr al-Zayat. In 2002 the Ritz briefly obtained a freezing order over his Boeing 747 and Rolls-Royce. Mr Osborne wrote to him in 2003: “I do not, of course, plan to take the very ill-advised route of my colleagues at the Ritz as I am sure that, in view of our warm friendship, we can settle this in a manner that will keep us happy whilst not over burdening you.”

In 2004 Mr Osborne wrote again: “The rumour around town is that you have paid off all your casino debts (except us).” Mr al-Zayat replied the same day expressing his shock that Mr Osborne paid attention to rumours. Aspinall’s finally went to court to recover the debt in 2006, a few days before the legal limitation period expired. By then Mr al-Zayat had gambled £92 million and lost £23 million in 12 years as their customer.

The judge found that the 12-month deal to postpone payment of the £2 million amounted to illegal credit under the Gaming Act 1968. Casinos are expected by law to show social responsibility by refusing punters credit in case it encourages people to squander money they cannot afford. Mr al-Zayat, who lives in Nicosia and refrains from gambling, said in a statement that he felt vindicated by the judgment. Aspinall’s declined to comment.

Explore Law

• Corporate Law

• Public Law

• Columnists

• Law Panel

• Student Law

• Law Reports

Times Recommends

• Future Stars of the Bar 2008
• Lawyer of the Week: Julie Morris
• Charging suspects - why it's a job for prosecutors