The Gambler Who Blew $127 Million

During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managedUv Lampto lose nearly $127 million. The run is believed to be one of the biggest losing streaks by an individual in Las Vegas history. It devoured much of Mr. Watanabe's personal fortune, he says, which he built up over more than two decades running his family's party-favor import business in Omaha, Neb. It also benefitted the two casinos' parent company, Harrah's Entertainment Inc., which derived about 5.6% of its Las Vegas gambling revenue from Mr. Watanabe that year. Today, Mr. Watanabe and Harrah's are fighting over another issue: whether the casino company bears some of the responsibility for his losses. In a civil suit filed in Clark County District Court last month, Mr. Watanabe, 52 years old, says casino staff routinely plied him with liquor and pain medication as part of a systematic plan to keep him gambling. Nevada's Gaming Control Board has opened a separate investigation into whether Harrah's violated gambling regulations, based on allegations made by Mr. Watanabe. In April, the Clark County District Attorney's office charged Mr. Watanabe with four felony counts in district court for intent to defraud and steal from Harrah's, stemming from $14.7 million that the casino says it extended to him as credit, and that he lost. Although Mr. Watanabe has paid nearly $112 million to Harrah's, he has refused to pay the rest. He denies the charges, alleging that the casino reneged on promises to give him cash back on some losses, and encouraged him to gamble while intoxicated. If convicted, Mr. Watanabe faces up to 28 years in prison. Jan Jones, Harrah's senior vice president for communications and government relations, says Mr. Watanabe's civil suit and his defense against the criminal charges are attempts to get out of paying a debt and to avoid accepting responsibility for his own actions. "Mr. Watanabe is a criminal defendant who faces imprisonment," Ms. Jones says. "All of his statements need to be seen in that light." Several former and current Harrah's employeesBansay their managers told them to let Mr. Watanabe continue betting while heUv Lampwas visibly intoxicated, even though casino rules and state law stipulate that anyone who is clearly drunk shouldn't be allowed to gamble. These employees say they were afraid they would be fired if they did anything to discourage Mr. Watanabe from gambling at the casinos. Ms. Jones says company policy is to ask intoxicated gamblers to refrain from gambling. She says Harrah's has conducted an internal investigation into how its staff treated Mr. Watanabe but declined to release details because of the ongoing litigation. Mr. Watanabe declined to be interviewed for this article. His lawyer, Pierce O'Donnell, says Harrah's "preyed" on Mr. Watanabe's condition. But he says his client also acknowledges that he "drank to excess." Mr. Watanabe "takes full responsibility for his condition at the time....He's not saying the devil made me do it." Luring the 'Whales' Mr. Watanabe's situation illustrates the often-uneasy relationships casinos have with their biggest clients, also known as "whales." Casinos vie to lure these high rollers by doling out luxury suites, use of private jets, and a cadre of personal handlers to fulfill every flight of fancy, from wire transfers to fishing trips to Alaska. Analysts say competition for this group has become especially fierce because the portion of revenue from big-spending clients appears to be increasing amid a downturn in overall gambling. Part of that analysis is based on revenue from baccarat, a high-stakes game favored by high rollers. Baccarat play on the Las Vegas Strip grew to 14.7% of gambling revenue in the last 12 months from 13% during the same period in 2007, according to state gaming regulators. Revenue from all gambling on the Strip over the same period has declined 19.1%. But casino operators often struggle to manage high rollers. Some are compulsive gamblers whose losses -- and lives -- can quickly spiral out of control. In some instances, gamblers have tried to turn the blame around on casinos in civil suits. Such attempts are rarely, if ever, successful, experts say. In 1993, former Philadelphia Eagles owner Leonard Tose failed to convince a jury in a civil suit against Hollywood Casino Corp. that employees of the casino had gotten him so drunk that he didn't know what he was doing when he gambled away millions in Atlantic City, N.J. As a result, he had to pay the casino $1.23 million in gambling debt. He died in 2003. Nevada treats unpaid gambling debtBanas a criminal matter handled by the District Attorney's bad-checks unit. Most defendants agree to pay the debt through a payment plan before charges are filed, with around 10% tacked on to fund the D.A. unit. Clark County, which encompassesUv LampLas Vegas, prosecutes roughly 200 cases involving gambling debts a month, says Bernie Zadrowski, who runs the bad-checks unit.