The Gambler Who Blew $127 Million 

In 2007, Terrance Watanabe, the former CEO of the Oriental Trading Company, experienced one of the most significant gambling losses in Las Vegas history. Over the course of the year, he lost a staggering $127 million at Caesars Palace and Rio casinos. This extraordinary loss amounted to approximately 5.6% of Harrah’s Entertainment Inc.’s total Las Vegas gambling revenue that year, underscoring the sheer magnitude of Watanabe’s gambling habits.

Watanabe’s fall from wealth and status has become an infamous case study in the high-stakes world of casino gambling, where “whales”—a term for the industry’s most lucrative customers—are courted with lavish offers and treated to unparalleled luxury. His story also highlights the darker side of gambling addiction, raising questions about the ethical responsibilities of casinos in managing their high-spending patrons, especially when such individuals show signs of compulsive gambling or substance abuse.

Building the Fortune

Terrance Watanabe, now 52, inherited and grew his family’s party-favor import business, Oriental Trading Company, a firm that provided novelty toys, trinkets, and other small items commonly seen at carnivals and fundraisers. His father, Harry Watanabe, founded the company in Omaha, Nebraska, after immigrating from Japan. Under Terrance’s leadership, the company expanded dramatically, with revenues reaching $300 million by the time he sold it in 2000 to a private equity firm.

While Watanabe was known as a quiet, reserved man in his professional life, he built a reputation in Omaha as a savvy businessman and generous philanthropist. He donated millions to various causes, particularly those related to AIDS research and services, and became a prominent figure in local politics by contributing nearly $500,000 to political campaigns, mostly to the Democratic National Party.

However, after selling his company, Watanabe found himself adrift. With the business no longer consuming his time and energy, he struggled to find a new purpose. Several of his business ventures post-sale, including an attempt to open a restaurant, failed to gain traction, leaving him with little to occupy his time. It was during this period of restlessness that he began frequenting casinos, seeking the thrill and excitement that his new, leisurely lifestyle lacked.

The Rise of the Gambling Addiction

Watanabe’s gambling habits started relatively modestly at a Harrah’s casino in Council Bluffs, Iowa, just across the river from Omaha. Over time, his trips to the casino became more frequent, and his betting amounts grew larger. By 2005, he was making regular trips to Las Vegas, where his gambling addiction reached new heights.

Initially, Watanabe became a regular at the Wynn Las Vegas casino, one of the city’s premier gambling establishments. However, in 2007, Wynn’s CEO, Steve Wynn, grew concerned about Watanabe’s erratic behavior and excessive betting. Wynn believed that Watanabe had developed a serious gambling and alcohol problem and decided to bar him from the casino. According to a letter sent by Watanabe’s attorney to the Nevada Gaming Control Board, Steve Wynn personally concluded that Watanabe was a compulsive gambler and an alcoholic, which led to his exclusion from the property.

Watanabe, however, did not take a break from gambling. Instead, he shifted his focus to Caesars Palace and the Rio, two properties owned by Harrah’s Entertainment. There, he found himself welcomed with open arms, and the casinos were more than happy to accommodate his high-roller lifestyle. In exchange for his extravagant betting, Watanabe was given access to private jets, luxury suites, and a cadre of personal handlers who catered to his every whim. The casino even created a new tier in its loyalty program, “chairman,” exclusively for Watanabe, further highlighting his status as one of the industry’s most valuable customers.

The case underscores the complex relationship between high-stakes gamblers, often referred to as “whales,” and casinos. These elite gamblers are lured with luxury incentives such as private jets, high-end suites, and exclusive perks, yet their gambling behavior can spiral out of control. Watanabe’s legal battle is significant, as it raises questions about the responsibilities of casinos in managing problem gambling among their biggest clients.

The Casino’s Role

The details of Watanabe’s gambling spree at Caesars and Rio have since come under scrutiny, particularly regarding the casino’s treatment of its high-spending guest. In a civil lawsuit filed in Clark County District Court, Watanabe accuses Harrah’s of deliberately exploiting his addiction. He claims that casino staff routinely supplied him with alcohol and prescription pain medication, specifically Lortab, to keep him in a state of intoxication and to encourage him to continue gambling.

Watanabe alleges that the casinos ignored standard regulations and policies designed to protect problem gamblers. Nevada state law stipulates that visibly intoxicated individuals should not be allowed to gamble, and casino employees are required to intervene when a player is clearly under the influence. However, multiple former and current Harrah’s employees have come forward, claiming that management instructed them to turn a blind eye to Watanabe’s condition. These employees feared losing their jobs if they discouraged him from gambling, as his losses were highly profitable for the casino.

One notable incident occurred when Watanabe fell in his suite and injured his back in September 2007. According to his court filing, his personal handlers, including Caesars employees Al Deleon and Kristian Kunder, provided him with pain medication without a doctor’s prescription. Although Kunder admits to giving Watanabe medication from his personal supply once after the fall, both he and Deleon deny any systematic efforts to keep Watanabe intoxicated. Nonetheless, these claims have fueled an ongoing legal battle that has raised important ethical questions about the lengths casinos will go to retain their most lucrative clients.

Jan Jones, Harrah’s senior vice president for communications and government relations, has vigorously denied Watanabe’s claims, insisting that his civil lawsuit and criminal defense are merely tactics to avoid paying his debts. “Mr. Watanabe is a criminal defendant who faces imprisonment,” she said in an interview. “All of his statements need to be seen in that light.”

Legal Trouble

In addition to the civil suit, Watanabe is facing four felony charges in connection with $14.7 million in unpaid gambling debt. Despite having already paid $112 million to Harrah’s, Watanabe refuses to cover the remaining amount, arguing that the casino reneged on promises to give him cash back on some of his losses and encouraged him to gamble while under the influence. If convicted, Watanabe could face up to 28 years in prison.

Nevada’s Gaming Control Board has also opened an investigation into Harrah’s conduct to determine whether the casino violated state regulations. However, it remains unclear whether any fines or penalties will be imposed on the company. Historically, Nevada regulators have been reluctant to hold casinos accountable for allowing intoxicated individuals to gamble, despite clear rules prohibiting such practices.

For example, in 1993, Leonard Tose, the former owner of the Philadelphia Eagles, unsuccessfully sued Hollywood Casino Corp., claiming that the casino got him so drunk that he was unable to make rational decisions while gambling. The jury ruled against Tose, forcing him to pay $1.23 million in unpaid debts. Similar cases have also failed in criminal courts, where the rule tends to be: “Nobody made you drunk.”

The Bigger Picture

Watanabe’s case sheds light on the often precarious relationship between casinos and their highest-spending customers. While “whales” like Watanabe are prized by the industry, their compulsive gambling habits can lead to disastrous financial and personal consequences. Some experts suggest that casinos need to adopt more stringent responsible gaming measures, particularly when dealing with individuals who show signs of addiction.

In the meantime, Watanabe has sought treatment for his gambling and alcohol problems. His sister, Pam Watanabe-Gerdes, says that he entered a residential treatment facility in 2008 and has not gambled since. He has sold his Omaha mansion and now lives in the Bay Area, where he is attempting to rebuild his life.

As for Harrah’s, the company continues to deny any wrongdoing, emphasizing that Watanabe, like any adult, made his own decisions about how to spend his money. “We’re in the gambling business,” Jan Jones said. “We had no reason to believe that Terry Watanabe was anything other than a big player with huge resources who made an adult decision to bet the money he did.”

The case is set to go to trial next year, where Watanabe will face the charges related to his unpaid gambling debts. The outcome of this case could have significant implications for the future of the gaming industry and the way it handles high-rollers with gambling addictions.

Written by Alexandra Berzon, WSJ