Whale’s defense vs. Harrah’s gains traction

By Jeff German

Wednesday, Aug. 5, 2009 | 2 a.m.

Gaming regulators are finally starting to acknowledge the seriousness of a Nebraska high roller’s allegations against Harrah’s Entertainment.

Philanthropist Terrance K. Watanabe gambled away tens of millions of dollars at Harrah’s casinos in 2007. This year Harrah’s asked the Clark County district attorney’s office to file criminal charges against the 52-year-old for allegedly failing to repay $14.7 million in markers at two of the corporation’s casinos, Caesars Palace and the Rio.

In his defense, the 52-year-old Watanabe accused Harrah’s of supplying him with alcohol and prescription painkillers to keep him intoxicated at the tables as his losses mounted.

If this is true, not only is it contrary to the responsible gambling standards Harrah’s has set for itself, but it’s also against the law. Gaming regulations prohibit casinos from allowing “visibly intoxicated” players to continue to gamble. And illegal trafficking of prescription narcotics is drug dealing no matter where it happens.

Watanabe’s potentially explosive allegations got the attention of Harrah’s because, as the Sun reported July 25, the casino giant has brought in a national law firm to help it conduct an internal investigation.

And, after regulators downplayed the case for three months, Dennis Neilander, chairman of the Nevada Gaming Control Board, last week said the board’s Corporate Securities Division is “monitoring” the budding scandal and is “making inquiries.”

But beyond the prospect of regulatory sanctions, Harrah’s has something else to worry about — its credibility as an opponent of irresponsible gambling.

The company devotes an entire section on its Web site to its accomplishments in advocating responsible gambling. In a public service video linked to the Web site, Harrah’s CEO Gary Loveman reminds casino patrons that “there are a lot of times when you shouldn’t gamble — like if you’re under 21 or you’ve had too much to drink.”

That certainly is the kind of advice Watanabe could have used. Did anyone from Harrah’s give him that advice while he was, as he says, losing a total of $112 million at Harrah’s casinos in 2007? That would have made him one of the most prolific gamblers of all time in Las Vegas and a cash cow for the world’s largest casino company.

Did Harrah’s set aside its role as a leader of responsible gambling, failing to apply a standard to a man who claims to have been its biggest gambler?

It’s a question that puts Harrah’s “in a horrible position,” says Robert Langford, a criminal defense lawyer who has fought the casinos and the district attorney’s office in other gambling marker cases. With the allegation hanging out there for all this time, Harrah’s “definitely has an image problem,” Langford says.

The company’s credibility has suffered in the eyes of the district attorney’s office. Chances are the office would not have filed criminal charges against Watanabe had Harrah’s informed prosecutors beforehand that these allegations might come back to bite them.

Watanabe’s lawyers are poised to unload on the casino giant in court in their bid to get the criminal charges dismissed, and word within the district attorney’s office is that it doesn’t plan to take the fall for Harrah’s. Prosecutors plan to look into the allegations themselves.

If that isn’t enough, Watanabe has hired one of the country’s most well-known crisis management firms, Sitrick and Company, to turn up the heat on Harrah’s. The Los Angeles-based firm, which has a long list of high-profile clients, including the estate of Michael Jackson, has extensive national media contacts.

With further embarrassment on the horizon, Harrah’s may have to start acting more responsibly in this case.