I beat him at dice poker, he gives me the sword but it never shows up on my screen that a new item has been acquired and the sword isn't in my inventory either. This is really weird given that if I beat him again I get the Dun Banner Coat with no problems. Any solutions?

Same happened here. There's a bug where the sword doesn't appear if you exit out between games, so the fix is to keep playing until you beat him, then exit out when he refuses to play you anymore.

Just as you said... Anyways it wasn't worth it... It's an old rusty sword and it deals minimal damage.

Thanks