[Music playing]
Male: In the law, we presume that people make rational decisions, but is that always the case? Are otherwise legal contracts ever invalid because of circumstances? Let’s see if this clip influences your response.
Female: The philanthropist who lost $127 million gambling in just 1 year in Las Vegas. He says he racked up the huge debt when the casinos plied him with prescription drugs and alcohol to keep him gambling. ABC’s Lisa Fletcher in Las Vegas with more.
Female: Terrance Watanabe admits he gambled away a staggering sum, risking $825 million at the Caesar’s Palace and Rio casinos in 2007. But it’s not only the $127 million he lost that’s shocking. It’s Watanabe’s accusation that the casinos kept him drugged and drunk while he gambled, that the millions he lost were the casino’s ill-gotten gains.
Watanabe, the former owner of the popular mail order catalog Oriental Trading Company, says Caesar’s and Rio, both owned by Harrah’s, broke the law by allowing him to gamble when he was clearly intoxicated. He claims he was fed prescription drugs and alcohol to fuel round-the-clock gambling.
Male: To say that a casino would go so far as to actually try to drug their clients and keep them going, that would be extraordinary.
Female: But just as socking is the extraordinary star treatment Watanabe received from Harrah’s—a three-bedroom suite, a $17 million gambling limit, special vodka imported from Russia, served only to him. Watanabe was in a unique class of gamblers. He was a whale.
Male: In the gambling world, whales are the biggest of the big gamblers. There’s a lot of competition to bring those guys in.
Female: Watanabe says he would play three $50,000 hands of blackjack at a time, losing as much as $5 million in a single day. His gambling losses alone accounted for 5.6% of Harrah’s Las Vegas revenue in 2007. Harrah’s disputes Watanabe’s claims and has said they did not ever see him intoxicated while gambling. In a statement to ABC News, Harrah’s Entertainment states Watanabe is “a criminal defendant who faces imprisonment for theft and writing bad checks. All of his statement should be evaluated in that light.” The battle has gone to the courts. Watanabe has been charged with fraud. He faces 28 years in prison if convicted.
And Harrah’s says Terrance Watanabe still owes them more than $14 million. Now, he has paid back the balance of that $127 million. Meanwhile, Watanabe has filed a civil suit against the casinos, and the Nevada Gaming Commission has opened its own investigation. And incidentally, Diane, the total amount of money that Watanabe bet in 2007 is roughly equal to the gross domestic product of the British Virgin Islands.
Female: Oh my goodness. Thanks to you, Lisa, and we’re joined now by Mr. Watanabe’s attorney, Pierce O’Donnell, who is representing him in both the criminal case and the case he’s filed against the casinos, and it’s good to see you, Mr. O’Donnell.
Male: Good morning, Diane.
Female: Good to have you here. Whale. He was, he was considered a whale, biggest of the big.
Male: Yes.
Female: And we’re looking at 5% of the profits for Harrah’s?
Male: It’s 5.6% of the holding company, Harrah’s Entertainment, which was a public company, which the management sold for a very large amount of money the next year.
Female: Even with an addiction, how does someone—how does someone go in and lose $127 million?
Male: Quickly, unfortunately. It’s a tragedy. Mr. Watanabe’s a tragedy. There’s over 10 million other addicted gamblers in America, many of whom lose a staggering amount of money. Americans wagered and lost $60 billion at casinos in the last year.
Female: So let me understand what you were saying about what went on simultaneously as he was losing all of this money. Drinking, how much?
Male: Two to three bottles of vodka a day.
Female: Now, they say—the casino says that they didn’t see him intoxicated, there’s no record of people noticing that he was intoxicated.
Male: Well, we have dozens of statements from employees who are still there and are no longer there that they knowingly plied him with alcohol. They’ve said that to the media, the Wall Street Journal. I’m confident we’ll establish that the senior management knowingly plied him with alcohol while he was losing staggering sums.
Female: And drugs—what kind and how many?
Male: He hurt his back in September of 2007, about 4 months before he left. They gave him Lortab. No doctor’s diagnosis. They didn’t take him to a doctor and they gave him a highly addictive pills, 8–10 a day Lortab.
Female: They gave him?
Male: The employees gave it to him.
Female: The employees did.
Male: Sometimes in a candy box.
Female: But again, the casino does not authorize this. The casino does not authorize—
Male: That’s why we have juries. We think we’ll prove that they knew and authorized it.
Female: The casino and the company also say, look, $127 million debt. He paid back $112 million of it. If he thought he had been shanghaied with alcohol and drugs, why did he pay all of that back? And he’s just, in their view, refusing to pay the $14 million.
Male: Well, what happened was he was so addicted and so out of it that he didn’t really realize what was going on at the end. His sister came at Christmastime and intervened and brought him home. He went into a rehab facility and he’s doing very well in rehab, both on drinking and gambling, hired a lawyer, lawyer looked and he said, you know, I think they owe you money. We had a legitimate business dispute which they turned into a criminal indictment.
Female: In fact, I think that picture is his sister with him as they’re walking out of the courtroom.
Male: It is.
Female: You say he became a tourist attraction for them.
Male: He did become a tourist attraction. It was outrageous, and at the end of the day, he takes responsibility for his gambling and drinking problem, but Harrah’s needs to take responsibility for preying on Mr. Watanabe. They have this self-righteous statement on their website, we don’t serve or accommodate problem gamblers, yet they did everything in the world to lure him, keep him there and, frankly, to exploit him. And that’s why we are not going to capitulate. He’s going to go to trial in July. We filed the civil suit, and we’ll let the good people of Las Vegas decide whether he had a criminal intent to defraud. He did not. He paid all of his legitimate debts, but on the last $14 million, he said, you know, this is too much. He got a lawyer and now he’s standing up, not just for himself but other people have problem gambling and he’s now doing philanthropic work in the area.
Female: And that, Mr. O’Donnell—
Male: Is me.
Female: Good to have you here.
Male: Yes.
Female: And go to our website if you want to know more about what the casino is saying and also about the details of this story. A hundred and twenty-seven million. It’s unimaginable.
Male: In the video, Mr. Watanabe wanted out of his contract to pay his gambling debt because the casino kept him drugged and drunk while he was gambling. Discuss the following.
One, consider the level of intoxication required to allow Mr. Watanabe to be relieved of his contractual obligation to pay. What evidence would Mr. Watanabe have to provide to show that level of intoxication?
Two, if Mr. Watanabe were gambling in a state where gambling was not legal, discuss how the courts would treat the case. Who would win the case and why?
Three, discuss whether the law should allow someone to voluntarily become intoxicated and then sign contracts, only to claim intoxication as a defense in being held to the contract.
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