LAS VEGAS -- During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managed to 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.
View Full ImagePeter McCollough for The Wall Street Journal
Terrance Watanabe, 52, is believed to have the biggest losing streak in Las Vegas history, losing $127 million dollars in one year. Mr. Watanabe, who now lives in the Bay Area, stands near the entrance to Stanford University on Dec. 3, 2009.
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 employees say their managers told them to let Mr. Watanabe continue betting while he was 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.
View Full ImageCourtesy of Watanabe Family
Mr. Watanabe made his fortune running the party-favor business he inherited from his father, Harry.
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 debt as 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 encompasses Las Vegas, prosecutes roughly 200 cases involving gambling debts a month, says Bernie Zadrowski, who runs the bad-checks unit.
View Full ImageThe Omaha World-Herald
Mr. Watanabe at an Oriental Trading Company office in Ralston, Neb., in August 1995
Just as in civil cases, people with alleged unpaid debts sometimes try to get out of criminal charges by claiming that casinos had a hand in keeping them intoxicated. Although Mr. Zadrowski declined to comment specifically on Mr. Watanabe's case, he says this kind of defense never works in criminal court: "Uniformly, the rule is nobody made you drunk."
State regulators have the authority to fine casinos for letting people gamble who are visibly intoxicated, but such fines haven't been levied, says Brian Duffrin, executive secretary to the Nevada Gaming Control Board and the Nevada Gaming Commissions.
Still, casinos will sometimes bar gamblers who are behaving erratically or whom they suspect won't pay their debts. "It almost becomes a cost-benefit decision," says Glenn Christenson, a former Station Casinos executive who is chairman of the National Center for Responsible Gaming, an industry-funded addiction organization.
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discuss
“ I'm sorry. Terrence Watanabe should've stopped after $50 million in losses. ”— Elton Tang
Mr. Watanabe says in court documents that he was barred from the Wynn casino in 2007 because of compulsive drinking and gambling. A Wynn spokeswoman declined to comment on the matter.
Harrah's Caesars and Rio casinos continued to put out the welcome mat. As part of the criminal case against Mr. Watanabe, Wilson Ning, a Harrah's marketing executive, testified before a grand jury in April that he didn't see Mr. Watanabe intoxicated at Caesars or Rio casinos, according to Mr. Zadrowski, the chief deputy district attorney who runs the bad-checks unit.
In 2007, Mr. Watanabe's prodigality became almost as legendary as his gambling. According to court documents, Mr. Watanabe says he regularly handed out to Caesars employees bundles of $100 bills that could total as much as $20,000.
Al Deleon and Kristian Kunder, two of Mr. Watanabe's personal handlers at Caesars, say he had thousands of Tiffany gift boxes filled with $50 gift cards or $100 gift coins that he would hand out to bartenders, nightclub operators, security guards and others. They say he once told a security guard to go to a supermarket and buy every cut of steak, and then proceeded to hand them out to employees.
The Trinket Empire
A native of Omaha, Neb., Mr. Watanabe built his fortune on plastic trinkets, the kind given away at carnivals and church fund-raisers: batons filled with tinsel, magic wands that light up, plastic spider rings that cost $1 for a bag of more than 100.
His father, Harry Watanabe, founded the import business, Oriental Trading Co., in 1932, after immigrating to the U.S. from Japan. As children, Mr. Watanabe and his younger sister and brother worked with their father after school. His mother, Fern, a Nebraska native, was a secretary there.
When Terrance Watanabe was 15, his father asked him if he wanted to take over the business, as is Japanese tradition for the first-born son, says his sister, Pam Watanabe-Gerdes. By the time he was 20, he was chief executive.
Some who knew Mr. Watanabe in Omaha describe him as guarded and shy. But he was also savvy at both marketing and selecting merchandise, says Bob Thomas, a chief operating officer at the company. It was those skills that helped Mr. Watanabe grow a modest toy business into a catalog empire that raked in $300 million in revenue by the time of its sale in 2000, Mr. Thomas says.
View Full ImageAssociated Press
Terrance Watanabe, center, and his sister, Pam Watanabe-Gerdes, leave a Las Vegas courthouse where he faced criminal charges for $14.7 million in alleged unpaid gambling debt.
The job was all-consuming, say former associates. He traveled for long stretches of time examining merchandise in Asia. He never married. His sister and others who know him say they don't believe he ever had a significant romantic relationship. "That was his life, that company," Mr. Thomas says. "It engulfed him."
In 1995, Mr. Watanabe bought an 18,000-square-foot mansion on four acres for $1.8 million, according to RealQuest. A major Omaha philanthropist, he gave millions to AIDS services, according to his foundation's records. He also donated nearly $500,000 to political causes, mostly to the Democratic National Party.
In 2000, Mr. Watanabe sold his company to Brentwood Assoc. of Los Angeles for an undisclosed sum. Oriental Trading has since been acquired by the Carlyle Group.
After the sale, Mr. Watanabe said his plan was to throw himself into his philanthropic work and have more fun. "If it's not fun, it's not worth doing," Mr. Watanabe told his hometown newspaper, the Omaha World-Herald, in 2000.
Donations from his foundation grew, but he soon became restless. Several business ideas, including opening a restaurant, went nowhere. "He didn't know what to do with his time," says his sister.
Betting the House
He found an answer at a Harrah's casino in Council Bluffs, Iowa, across the river from Omaha. He started gambling there in 2003, according to documents filed in Mr. Watanabe's civil suit. He became one of the casino's top customers, says Gabe Sullivan, a former Harrah's host who attended to Mr. Watanabe there.
Once he began traveling to Las Vegas frequently in 2005, Mr. Watanabe's gambling and drinking intensified, according to his civil suit.
In 2006, Mr. Watanabe resided primarily at Wynn Resorts' Wynn Las Vegas casino. But, he says, his heavy betting drew the attention of Chief Executive Steve Wynn. After meeting with him in June 2007, Mr. Wynn concluded that he was a compulsive gambler and alcoholic, and barred him from the casino, according to a letter to the Nevada Gaming Control Board drafted by Mr. Watanabe's attorney, Pierce O'Donnell.
Ms. Jones, the Harrah's vice president, says, "It was not our understanding that he was kicked out of Wynn because of problem gambling."
The casino operator offered him lucrative terms to gamble at its casinos, according to Mr. Watanabe's letter to the Control Board and copies of emails sent from Harrah's to Mr. Watanabe's assistant that were included in the court filings.
In a series of emails signed by Mr. Ning, the Harrah's marketing executive, the casino company laid out the terms that it was willing to offer him, which included "a special formula just for Mr. Watanabe."
Mr. Ning specified such offers as tickets to the Rolling Stones, $12,500 a month for airfare and $500,000 in credit at the gift stores. Harrah's also offered 15% cash back on table losses greater than $500,000, special high-limit games and other incentives. Mr. Watanabe alleges that Harrah's later rolled those terms back.
Mr. Ning didn't respond to requests for comment. Ms. Jones declined to comment on whether the company rolled back any incentives, but says "the practice of offering incentives and discounts to significant players is not unusual."
Harrah's Total Rewards Player's Club system, a loyalty program similar to that of other big casinos, created a special rank for Mr. Watanabe, "chairman," according to the filing and several employees. Before Mr. Watanabe, the most exclusive rank was "Seven Star."
Mr. Watanabe resided for free in a three-bedroom suite at Caesars, had access to his favorite bartender, drank a special brand of vodka, Jewel of Russia, and was constantly surrounded by attendants to serve his every need, such as a seven-course meal from the casino's Bradley Ogden restaurant delivered to him while he was gambling, according to the court filing and employee accounts.
Ms. Jones says Mr. Watanabe was treated just like any other high-end gambler: "When his requests were appropriate we met them."
Losing $5 Million in a Day
One reason Mr. Watanabe was seen as so valuable to Harrah's, say Messrs. Deleon and Kunder, two of his handlers, is that he gravitated toward games with low odds, including roulette and slots. "He was considered a 'house' player because slots and roulette are house games -- they have terrible odds for the player," says Mr. Kunder. "And the way he played blackjack, he made it a house game. He made such bad decisions on the blackjack table."
Ms. Jones disputes this interpretation. "I don't put a lot of credibility" in that, she says.
Several employees say Mr. Watanabe would stay at the tables for up to 24 hours, sometimes losing as much as $5 million in a single binge. He was allowed to play three blackjack hands simultaneously with a $50,000 limit for each hand. At one point, the casino raised his credit to $17 million, according to court documents.
Ms. Jones says for high rollers, the company will often extend credit.
When Mr. Sullivan, the Iowa casino host, visited Mr. Watanabe in Las Vegas during the height of his binge in 2007, he says, Mr. Watanabe appeared incoherent and had trouble remembering details of conversations. Other employees recall Mr. Watanabe stumbling around and dozing off at casino tables, some of which were located next to a nightclub blaring loud music.
Mr. Kunder and Mr. Deleon say they both voiced concerns to managers that Mr. Watanabe was too intoxicated, and were told not to get involved. "Nobody wanted to be the one to cut him off," Mr. Kunder says. "We were afraid of what upper management would do if he left because of our actions."
Mr. Kunder left Harrah's in the summer of 2008 to work at nightclubs. He has since moved to Chicago and works at a cell-phone company. Mr. Deleon left the casino in March 2009 to do similar work at Red Rock casino, owned by Station Casinos. Mr. Sullivan left Harrah's in March 2008 when his contract wasn't renewed by Harrah's. Ms. Jones says the departures were not related to Mr. Watanabe, but declined to further discuss the situations of individual employees.
Looking the Other Way
Mr. Watanabe alleges that during this period Harrah's not only didn't make him leave when he was drunk, but it plied him with alcohol and prescription drugs to encourage him to stay and gamble.
Several Caesars employees say there was no policy to keep Mr. Watanabe drugged or drunk. But, they say, staff knew the company wanted to keep one of the Strip's most lucrative customers, and so looked the other way. A picture of him was hung in employee back rooms, they say.
Ms. Jones says there was nothing inappropriate or unusual about fulfilling the reasonable requests of a good customer.
"We're in the gambling business," she says. "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. Are we going to provide an environment that keeps him very happy? Of course we are."
Regarding Harrah's alcohol policy, Ms. Jones says, the company tells its employees to ask people who are clearly intoxicated to refrain from gambling, as required under state regulations. Employees attend a responsible-gaming class every year where they learn how and when to tell gamblers to leave the casino. The company has a phone number that employees can call to anonymously report unethical or improper behavior by other employees. There are no reports that anyone called the number regarding Mr. Watanabe, Ms. Jones says.
In its marketing materials, Harrah's reports its record as an early advocate and funder of organizations that help gambling addicts. Among other measures, it honors requests from addicts that they be barred from all casinos run by the company.
In September 2007, Mr. Watanabe fell in his room and hurt his back. He says his handlers -- including Mr. Kunder and Mr. Deleon -- supplied him doses of the prescription pain medication Lortab without a doctor's prescription, his court filing says.
Mr. Kunder says he gave Mr. Watanabe prescription pain medication from his personal supply a single time on the day after the fall upon Mr. Watanabe's request. Mr. Deleon says he never gave Mr. Watanabe drugs.
Ms. Jones said that if employees ever provided Mr. Watanabe drugs, it would be against company policy.
Mr. Watanabe's sister says she and her brother and sister-in-law weren't aware of how much money he was losing until a 2007 Thanksgiving visit, when he opened up to her about the depth of his losses. "It was embarrassing for him," she says.
Two weeks later, she says, she returned to Las Vegas and brought him home. Mr. Watanabe was back in Las Vegas gambling for a period in 2008. But he entered a residential treatment facility that year and hasn't entered a casino since, Ms. Watanabe-Gerdes says.
In July 2008, Mr. Watanabe sold his Omaha mansion for $2.66 million to a developer, according to Douglas County records. He now lives near San Francisco.
Next summer, Mr. Watanabe is due to stand trial on the felony charges stemming from his debts. In May, he pled not guilty.
Write to Alexandra Berzon at alexandra.berzon@wsj.com
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.
View Full ImagePeter McCollough for The Wall Street Journal
Terrance Watanabe, 52, is believed to have the biggest losing streak in Las Vegas history, losing $127 million dollars in one year. Mr. Watanabe, who now lives in the Bay Area, stands near the entrance to Stanford University on Dec. 3, 2009.
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 employees say their managers told them to let Mr. Watanabe continue betting while he was 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.
View Full ImageCourtesy of Watanabe Family
Mr. Watanabe made his fortune running the party-favor business he inherited from his father, Harry.
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 debt as 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 encompasses Las Vegas, prosecutes roughly 200 cases involving gambling debts a month, says Bernie Zadrowski, who runs the bad-checks unit.
View Full ImageThe Omaha World-Herald
Mr. Watanabe at an Oriental Trading Company office in Ralston, Neb., in August 1995
Just as in civil cases, people with alleged unpaid debts sometimes try to get out of criminal charges by claiming that casinos had a hand in keeping them intoxicated. Although Mr. Zadrowski declined to comment specifically on Mr. Watanabe's case, he says this kind of defense never works in criminal court: "Uniformly, the rule is nobody made you drunk."
State regulators have the authority to fine casinos for letting people gamble who are visibly intoxicated, but such fines haven't been levied, says Brian Duffrin, executive secretary to the Nevada Gaming Control Board and the Nevada Gaming Commissions.
Still, casinos will sometimes bar gamblers who are behaving erratically or whom they suspect won't pay their debts. "It almost becomes a cost-benefit decision," says Glenn Christenson, a former Station Casinos executive who is chairman of the National Center for Responsible Gaming, an industry-funded addiction organization.
Journal Community
discuss
“ I'm sorry. Terrence Watanabe should've stopped after $50 million in losses. ”— Elton Tang
Mr. Watanabe says in court documents that he was barred from the Wynn casino in 2007 because of compulsive drinking and gambling. A Wynn spokeswoman declined to comment on the matter.
Harrah's Caesars and Rio casinos continued to put out the welcome mat. As part of the criminal case against Mr. Watanabe, Wilson Ning, a Harrah's marketing executive, testified before a grand jury in April that he didn't see Mr. Watanabe intoxicated at Caesars or Rio casinos, according to Mr. Zadrowski, the chief deputy district attorney who runs the bad-checks unit.
In 2007, Mr. Watanabe's prodigality became almost as legendary as his gambling. According to court documents, Mr. Watanabe says he regularly handed out to Caesars employees bundles of $100 bills that could total as much as $20,000.
Al Deleon and Kristian Kunder, two of Mr. Watanabe's personal handlers at Caesars, say he had thousands of Tiffany gift boxes filled with $50 gift cards or $100 gift coins that he would hand out to bartenders, nightclub operators, security guards and others. They say he once told a security guard to go to a supermarket and buy every cut of steak, and then proceeded to hand them out to employees.
The Trinket Empire
A native of Omaha, Neb., Mr. Watanabe built his fortune on plastic trinkets, the kind given away at carnivals and church fund-raisers: batons filled with tinsel, magic wands that light up, plastic spider rings that cost $1 for a bag of more than 100.
His father, Harry Watanabe, founded the import business, Oriental Trading Co., in 1932, after immigrating to the U.S. from Japan. As children, Mr. Watanabe and his younger sister and brother worked with their father after school. His mother, Fern, a Nebraska native, was a secretary there.
When Terrance Watanabe was 15, his father asked him if he wanted to take over the business, as is Japanese tradition for the first-born son, says his sister, Pam Watanabe-Gerdes. By the time he was 20, he was chief executive.
Some who knew Mr. Watanabe in Omaha describe him as guarded and shy. But he was also savvy at both marketing and selecting merchandise, says Bob Thomas, a chief operating officer at the company. It was those skills that helped Mr. Watanabe grow a modest toy business into a catalog empire that raked in $300 million in revenue by the time of its sale in 2000, Mr. Thomas says.
View Full ImageAssociated Press
Terrance Watanabe, center, and his sister, Pam Watanabe-Gerdes, leave a Las Vegas courthouse where he faced criminal charges for $14.7 million in alleged unpaid gambling debt.
The job was all-consuming, say former associates. He traveled for long stretches of time examining merchandise in Asia. He never married. His sister and others who know him say they don't believe he ever had a significant romantic relationship. "That was his life, that company," Mr. Thomas says. "It engulfed him."
In 1995, Mr. Watanabe bought an 18,000-square-foot mansion on four acres for $1.8 million, according to RealQuest. A major Omaha philanthropist, he gave millions to AIDS services, according to his foundation's records. He also donated nearly $500,000 to political causes, mostly to the Democratic National Party.
In 2000, Mr. Watanabe sold his company to Brentwood Assoc. of Los Angeles for an undisclosed sum. Oriental Trading has since been acquired by the Carlyle Group.
After the sale, Mr. Watanabe said his plan was to throw himself into his philanthropic work and have more fun. "If it's not fun, it's not worth doing," Mr. Watanabe told his hometown newspaper, the Omaha World-Herald, in 2000.
Donations from his foundation grew, but he soon became restless. Several business ideas, including opening a restaurant, went nowhere. "He didn't know what to do with his time," says his sister.
Betting the House
He found an answer at a Harrah's casino in Council Bluffs, Iowa, across the river from Omaha. He started gambling there in 2003, according to documents filed in Mr. Watanabe's civil suit. He became one of the casino's top customers, says Gabe Sullivan, a former Harrah's host who attended to Mr. Watanabe there.
Once he began traveling to Las Vegas frequently in 2005, Mr. Watanabe's gambling and drinking intensified, according to his civil suit.
In 2006, Mr. Watanabe resided primarily at Wynn Resorts' Wynn Las Vegas casino. But, he says, his heavy betting drew the attention of Chief Executive Steve Wynn. After meeting with him in June 2007, Mr. Wynn concluded that he was a compulsive gambler and alcoholic, and barred him from the casino, according to a letter to the Nevada Gaming Control Board drafted by Mr. Watanabe's attorney, Pierce O'Donnell.
Ms. Jones, the Harrah's vice president, says, "It was not our understanding that he was kicked out of Wynn because of problem gambling."
The casino operator offered him lucrative terms to gamble at its casinos, according to Mr. Watanabe's letter to the Control Board and copies of emails sent from Harrah's to Mr. Watanabe's assistant that were included in the court filings.
In a series of emails signed by Mr. Ning, the Harrah's marketing executive, the casino company laid out the terms that it was willing to offer him, which included "a special formula just for Mr. Watanabe."
Mr. Ning specified such offers as tickets to the Rolling Stones, $12,500 a month for airfare and $500,000 in credit at the gift stores. Harrah's also offered 15% cash back on table losses greater than $500,000, special high-limit games and other incentives. Mr. Watanabe alleges that Harrah's later rolled those terms back.
Mr. Ning didn't respond to requests for comment. Ms. Jones declined to comment on whether the company rolled back any incentives, but says "the practice of offering incentives and discounts to significant players is not unusual."
Harrah's Total Rewards Player's Club system, a loyalty program similar to that of other big casinos, created a special rank for Mr. Watanabe, "chairman," according to the filing and several employees. Before Mr. Watanabe, the most exclusive rank was "Seven Star."
Mr. Watanabe resided for free in a three-bedroom suite at Caesars, had access to his favorite bartender, drank a special brand of vodka, Jewel of Russia, and was constantly surrounded by attendants to serve his every need, such as a seven-course meal from the casino's Bradley Ogden restaurant delivered to him while he was gambling, according to the court filing and employee accounts.
Ms. Jones says Mr. Watanabe was treated just like any other high-end gambler: "When his requests were appropriate we met them."
Losing $5 Million in a Day
One reason Mr. Watanabe was seen as so valuable to Harrah's, say Messrs. Deleon and Kunder, two of his handlers, is that he gravitated toward games with low odds, including roulette and slots. "He was considered a 'house' player because slots and roulette are house games -- they have terrible odds for the player," says Mr. Kunder. "And the way he played blackjack, he made it a house game. He made such bad decisions on the blackjack table."
Ms. Jones disputes this interpretation. "I don't put a lot of credibility" in that, she says.
Several employees say Mr. Watanabe would stay at the tables for up to 24 hours, sometimes losing as much as $5 million in a single binge. He was allowed to play three blackjack hands simultaneously with a $50,000 limit for each hand. At one point, the casino raised his credit to $17 million, according to court documents.
Ms. Jones says for high rollers, the company will often extend credit.
When Mr. Sullivan, the Iowa casino host, visited Mr. Watanabe in Las Vegas during the height of his binge in 2007, he says, Mr. Watanabe appeared incoherent and had trouble remembering details of conversations. Other employees recall Mr. Watanabe stumbling around and dozing off at casino tables, some of which were located next to a nightclub blaring loud music.
Mr. Kunder and Mr. Deleon say they both voiced concerns to managers that Mr. Watanabe was too intoxicated, and were told not to get involved. "Nobody wanted to be the one to cut him off," Mr. Kunder says. "We were afraid of what upper management would do if he left because of our actions."
Mr. Kunder left Harrah's in the summer of 2008 to work at nightclubs. He has since moved to Chicago and works at a cell-phone company. Mr. Deleon left the casino in March 2009 to do similar work at Red Rock casino, owned by Station Casinos. Mr. Sullivan left Harrah's in March 2008 when his contract wasn't renewed by Harrah's. Ms. Jones says the departures were not related to Mr. Watanabe, but declined to further discuss the situations of individual employees.
Looking the Other Way
Mr. Watanabe alleges that during this period Harrah's not only didn't make him leave when he was drunk, but it plied him with alcohol and prescription drugs to encourage him to stay and gamble.
Several Caesars employees say there was no policy to keep Mr. Watanabe drugged or drunk. But, they say, staff knew the company wanted to keep one of the Strip's most lucrative customers, and so looked the other way. A picture of him was hung in employee back rooms, they say.
Ms. Jones says there was nothing inappropriate or unusual about fulfilling the reasonable requests of a good customer.
"We're in the gambling business," she says. "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. Are we going to provide an environment that keeps him very happy? Of course we are."
Regarding Harrah's alcohol policy, Ms. Jones says, the company tells its employees to ask people who are clearly intoxicated to refrain from gambling, as required under state regulations. Employees attend a responsible-gaming class every year where they learn how and when to tell gamblers to leave the casino. The company has a phone number that employees can call to anonymously report unethical or improper behavior by other employees. There are no reports that anyone called the number regarding Mr. Watanabe, Ms. Jones says.
In its marketing materials, Harrah's reports its record as an early advocate and funder of organizations that help gambling addicts. Among other measures, it honors requests from addicts that they be barred from all casinos run by the company.
In September 2007, Mr. Watanabe fell in his room and hurt his back. He says his handlers -- including Mr. Kunder and Mr. Deleon -- supplied him doses of the prescription pain medication Lortab without a doctor's prescription, his court filing says.
Mr. Kunder says he gave Mr. Watanabe prescription pain medication from his personal supply a single time on the day after the fall upon Mr. Watanabe's request. Mr. Deleon says he never gave Mr. Watanabe drugs.
Ms. Jones said that if employees ever provided Mr. Watanabe drugs, it would be against company policy.
Mr. Watanabe's sister says she and her brother and sister-in-law weren't aware of how much money he was losing until a 2007 Thanksgiving visit, when he opened up to her about the depth of his losses. "It was embarrassing for him," she says.
Two weeks later, she says, she returned to Las Vegas and brought him home. Mr. Watanabe was back in Las Vegas gambling for a period in 2008. But he entered a residential treatment facility that year and hasn't entered a casino since, Ms. Watanabe-Gerdes says.
In July 2008, Mr. Watanabe sold his Omaha mansion for $2.66 million to a developer, according to Douglas County records. He now lives near San Francisco.
Next summer, Mr. Watanabe is due to stand trial on the felony charges stemming from his debts. In May, he pled not guilty.
Write to Alexandra Berzon at alexandra.berzon@wsj.com
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