gambler blows $127 million
There are winners and there are losers, but the old axiom is that they don't build those huge skyscrapers in places like Las Vegas, Reno and other major gambling markets because they consistently pay out more than they take in.
With that as a preface, today we'll talk about a story of one of the biggest losers in gambling history. The Wall Street Journal this past week carried a detailed story on the saga of Terrance Watanabe, who owned a prosperous business but lost it all and then some in a yearlong gambling binge which ultimately resulted in over $127 million in losses. The article was written by Alexandra Berzon of The Wall Street Journal staff and started on the front page and jumped to a full inside page, complete with three photos.
Huge losses are seldom talked about and often they are known only to the losers and the host hotels, but this particular loser is having his losses well documented through a lawsuit he has filed against the host casino, Harrah's Entertainment, Inc. Most of Terrance Watanabe's millions were lost at the Harrahs Hotel and Casino and other Harrahs properties in the heart of the Las Vegas strip.
The suit, filed in Clark County District Court, says Harrahs staff routinely plied Terrance with liquor and pain medications in a systematic plan to keep him gambling. As a result, he says he is not owed all the money Harrahs claims he does.
Complicating this is the fact that the Clark County District Attorney has filed four felony charges against Watanabe for defrauding and stealing from Harrahs $14.7 million in a line of credit which he lost at the gambling tables.
He has paid Harrahs $112 million but he is refusing to pay the rest.
First, let's go back a ways. This big loser at the Las Vegas gambling tables is a native of Omaha, Neb. He built a sizable fortune selling plastic trinkets, the kinds which are often given away at carnivals and fundraisers. They could be batons filled with tinsel, magic wands that light up, plastic spider rings that cost $1 for a bag of 100, or other similar items.
His father started the business in 1932 after immigrating to the United States from Japan. When he was 15 the elder Watanabe turned the business over to his first-born son. By the time Terrance sold the business in 2000, it was grossing over $300 million annually.
Throughout his business career he was a big donor to political and community causes. He had millions and purchased a huge estate valued at $1.8 million. He was flashy and spent his money in many philanthropic ways.
But, then after a few years he became restless and he found a new activity. He found the Harrahs casino at Council Bluffs, Iowa, just across the river from Omaha. That was in 2003. It wasn't long and he was the biggest gambler at that casino. From there things escalated and he began taking trips to Las Vegas as his gambling and his drinking were magnified.
By 2005 he was residing primarily at the Wynn Las Vegas casino but his heavy betting caught the attention of owner Steve Wynn and in June of 2007 Wynn determined Watanabe was a compulsive gambler and alcoholic and banned him from that property.
That's when he moved to Harrahs where he was wooed with special deals, including tickets to Rolling Stones concert, $12,500 a month for airfares, $500,000 in credit at Harrahs' gift stores and even agreed to give him a 15 percent discount on losses over $500,000 at the tables.
While at Harrahs Waunakee lived in a three bedroom suite at Cesears Palace, another Harrahs owned hotel. He had access to his favorite bartender, drank special vodka called Jewel of Russia, was surrounded by attendants and he'd even get a seven course meal delivered right to his gambling station.
His favorite games were roulette and slots, both of which more heavily favor the house than some others. Sometimes he'd stay gambling for 24 hours or more and at times lost as much as $5 million in a single binge.
When he was in the midst of his binges Watanabe would have thousands of Tiffany gift boxes filled with $50 gift certificates and $100 gift coins that he would hand out to those attending to him. Once he told an attendant to go to a grocery store and buy every single steak and then handed them out to employees who were taking care of him.
Some of the people who watched over him the most would at times be given bundles of $100 bills totaling over $20,000.
We think those are enough details to show you how huge his gambling problem was. Eventually, the gambling and the drinking got the best of him and he quit both, but not before he lost this huge sum of money.
He now acknowledges he gambled and drank too much and takes responsibility for his actions. Still, he claims Harrahs is culpable as well and doesn't believe he owes the additional $14.7 million.
So, that's where this crazy case is right now. Big money is at stake and Harrahs of course, doesn't want to tarnish its image in the gambling community and most certainly with the high stakes gamblers that the industry has nicknamed "whales."
The high stake gamblers are given many, many perks from free lodging and meals to free use of corporate aircraft if they are big enough spenders. These whales are also most likely to be involved with games which are more favorable to the casino than others like blackjack and poker.
For example, baccarat is a high stakes game preferred by whales. Last year baccarat grew to 15 percent of gambling revenue on the Las Vegas strip, from 13 percent a year earlier. But revenue on the strip from all gambling was down by 19 percent in that same time frame.
So, that's exactly why it's a delicate relationship between the whales such as Terrance Watanabe and the casinos. The whales are a critical part of the profitability of the larger casinos. As a result, the casinos want to cater to every conceivable whim of the whales.
It will be interesting to see just how this all pans out. Cases like this seldom make it to court and are almost always settled before it gets to the courtroom. And, when they get to the courts, the casinos almost always prevail.
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