Gambler Who Lost $127 Million

AOL: Terrance Watanabe sometimes got so high on painkillers and alcohol in Las Vegas that he walked into doors and passed out at the gaming tables.

The Omaha philanthropist consumed more than two bottles of expensive vodka daily and gambled for days at a time without sleeping. In a single year, he lost $127 million at two casinos owned by Harrah’s Entertainment. Nearly $1 billion in wagers passed through his hands.

This embarrassing portrait of excess and dissipation comes from legal documents filed by Watanabe’s own attorneys, who are defending him against criminal charges that he still owes Harrah’s nearly $15 million from his gambling spree.

Watanabe’s lawyers cast the once wealthy businessman as the victim of heartless executives who enticed him to their casinos with offers of lavish rewards, then plied him with massive quantities of alcohol and drugs to keep him under control as they milked him of his fortune.

From Harrah’s perspective, Watanabe is a deadbeat gambler who faces four felonies and is telling his story publicly in a desperate attempt to avoid jail.

A civil lawsuit and a complaint to the Nevada Gaming Control Board filed last month by Watanabe’s lawyers allege that Harrah’s kept him a virtual “captive” at the Caesars and Rio casinos in 2007 and supplied him with the prescription painkiller Lortab without a doctor’s diagnosis or supervision.

“They preyed on a vulnerable person who had a gambling and alcohol addiction,” said Pierce O’Donnell, one of his attorneys. “Terry Watanabe takes responsibility for what he did, and Harrah’s needs to take responsibility for what they did.”

Watanabe, 52, is the former head of the Oriental Trading Co., a direct marketing firm that sells novelties and party items. In Omaha, he is known for donating money to AIDS patients, military families and the police department. He now lives in the San Francisco Bay Area. He declined through his attorneys to be interviewed.

Watanabe sold his interest in the family company in 2000 and by 2006 was gambling heavily in Las Vegas. In the parlance of the Strip, he was a “whale,” a high-roller whose huge losses can be a casino’s biggest source of revenue. Casinos vie with each other to entice whales to their tables, offering opulent rooms, private jets, gourmet meals, exclusive show tickets and all manner of other inducements.

Watanabe was one of the biggest whales to come along.

For a time he played at the Wynn casino, where he ran up losses of $26 million by June 2007. Owner Steve Wynn personally cut him off from further play, citing his apparent gambling and alcohol addictions, according to the complaint to the gaming board. A spokeswoman for Wynn said the casino had no comment.

Watanabe soon took up residence at Harrah’s properties, first the Rio and then Caesars, under an agreement that offered him 20 separate incentives, including a free luxury suite, an airfare allowance, discounts on his losses, private gaming areas, and deferred marker payments of at least 60 days, the complaint says.

The dispute over how much Watanabe owes Harrah’s centers on that agreement, which was recorded in a series of e-mails between Watanabe’s assistant and a Harrah’s executive, his attorneys say.

On its Web site, Harrah’s calls itself a leader in responsible gaming and says it trains its employees to recognize problem gamblers.

“Our company’s long-standing and continuing commitment to responsible gaming is something we take great pride in,” the Web site says. “Harrah’s position on this issue is clear: We want everyone who gambles at our casinos to be there for the right reasons: to simply have fun.”

But in Watanabe’s case, his attorneys say, the casino staff played a different role.

The complaint alleges that Harrah’s assigned employees to watch over Watanabe and ensure that he continued gambling at its properties.

During a six-month period in 2007, employees continually plied him with drinks, ignoring several requests from an acquaintance to water down his vodka, the complaint says. Photos of Watanabe were posted in staff areas so employees would know he should not be denied anything he wanted, his lawyers allege. At the height of his binge, witnesses say he consumed two to three bottles a day of his favorite brand, Jewel of Russia, according to court documents.

If Watanabe was absent from the casino floor for a time, his handlers would call or visit his hotel room and steer him back to the casino floor, the complaint alleges.

Staff members who objected to the way the casino was treating Watanabe were reassigned or dismissed, according to the complaint.

His attorneys say that Harrah’s carefully managed a daily routine for Watanabe that included alcohol and drugs, inadequate sleep and pressure to continue gambling. As his intoxication grew worse, his losses increased.

His condition began deteriorating markedly in September 2007 after he slipped on the marble floor in his suite and injured his back. He asked for aspirin or Tylenol, his attorneys say.

Instead of calling a doctor, casino employees began giving him Lortab, a prescription narcotic that should not be mixed with alcohol, the complaint says. Casino staff continually supplied him with the drug, it says, on one occasion delivering the pills to his room in a candy box.

Witnesses say Watanabe became so intoxicated that he slurred his speech, walked into obstacles and at times passed out while playing, according to the complaint. “Rather than taking him to his room, a staff member would wake him up to continue gambling or to sign a marker,” O’Donnell said in the complaint.

There is no indication from the documents that close friends or family members spent time with Watanabe in Las Vegas until he had lost much of his fortune.

Watanabe’s spree came to an end in December 2007 after his sister visited and persuaded him to leave Las Vegas.

By that time, he had given Harrah’s $112 million. But he balked at paying $14.75 million more in markers, contending that the debt was offset by promised discounts and other incentives that Harrah’s never delivered.

After Watanabe hired an attorney to help him negotiate, Harrah’s submitted the markers to his bank for payment. When the markers were returned because of insufficient funds, Harrah’s asked the district attorney to prosecute the man who had been their best customer.

In February, Watanabe turned himself in to face four felony counts of theft and fraud.

Under a unique Nevada law, Harrah’s turned over the markers to Clark County District Attorney David Roger for criminal prosecution.

The company is seeking the money despite the $112 million it has already taken from Watanabe — a sum so large it constituted almost 6 percent of casino revenues for the entire Harrah’s chain in 2007, the complaint says.

The prosecutor’s Bad Check Unit alleges that the markers Watanabe signed are the equivalent of checks that must be paid on demand. Watanabe’s lawyers contend that the markers represent loans, not checks, and therefore should not be subject to the bad check law.

The Bad Check Unit has handled cases involving the markers of several prominent gamblers, including the recent $900,000 debt of former NBA star Antoine Walker. But the $14.75 million at issue in the Watanabe case is the largest sum the unit has sought to recover.

Under the law, the district attorney’s office will receive a 10 percent commission on any amount it collects from Watanabe. O’Donnell, a prominent Los Angeles trial lawyer, questions whether such an arrangement is constitutional.

“The statutory scheme in Nevada creates an unholy alliance between private gambling companies and the public prosecutor,” he said in an interview. “There is no other industry and no other state where this happens. To give a bounty to the district attorney for collecting private debts is extraordinary.”

Deputy District Attorney Bernie Zadrowski, who supervises the Bad Check Unit, did not return telephone calls from Sphere.

Jan Jones, Harrah’s senior vice president for communications and government relations, issued a brief statement saying the company has no intention of asking the district attorney to drop the case.

Jones said Watanabe’s lawsuit and his complaint to the gaming board contain “false statements” but did not specify what she considers untrue. Jones and other Harrah’s representatives declined to answer any questions about the case.

“We will not get into a public debate with a criminal defendant who is trying to avoid imprisonment,” Jones said in her statement. “He is the one on trial; he’s the one who needs to explain his actions.”

Watanabe’s civil lawsuit does not specify the amount of damages it is seeking. In the complaint to the gaming board, O’Donnell calls for an investigation of Harrah’s and the possible suspension of the two casinos’ licenses.

“Mr. Watanabe is the victim of a ruthless corporation that deserves the harshest sanctions for its unlawful conduct,” he wrote. “Indeed, the evidence is overwhelming that Caesars reprehensibly behaved like a predator stalking, trapping and consuming its prey

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