The case of Mr. Watanabe and his $127 million gambling debt highlights how terrible decision making can ruin a blackjack player.

The story of Terry Watanabe is one of fabulous wealth, uncontrollable gambling addiction and shady casino management. Most of us are aware of the American businessman’s losing $127 million at Caesar’s Palace and the Rio (both owned by Harrah’s) in a single year as well as the ongoing case involving $14.7 million the casino firm extended to him on credit. He has refused to pay back the money, and in retaliation Harrah’s is accusing him of attempting to steal from them. The Wall Street Journal reported that he could face up to 28 years in prison. Ironically, a perverse version of skill is required to lose that much money. How did Watanabe pull off the unbelievable feat? We’ll analyze his losing blackjack strategies step by step.

An utter lack of sobriety

Watanabe was not only an uncontrollable gambling addict but an alcoholic as well. He would show up to the casino visibly drunk and immediately proceed to getting drunker. The New York Daily News reported that an anonymous security guard at Caesar’s claimed that he “does not recall ever seening Mr. Watanabe in a sober state,” during the 2007 gambling binge that wiped him of much of his family’s fortune.

Gambling drunk is arguable the worst strategy that a gambler can make. Especially when playing casino strategy games like blackjack it is crucial to be in a lucid mental state, able to observe everything and make rational decisions. Watanabe paid a great price for mixing gambling and alcohol, once losing $5 million during a drunken 24-hour binge at Caesar’s.

He is refusing to pay debts on the ground that’s that casino managers exploited his addictions by providing him with pain medication and encouraging him to drink heavily. Both Caesar’s and the Rio even provided him with personal bartenders, allegedly tasked with keeping him drunk. If true, this is in violation of casino management laws in Nevada, and could get Watanabe off the hook. Either way, he allowed his thirst for liquor to compromise his ability to make sound decisions.

Gamblers fallacy and losing blackjack strategies

Watanabe showed a tendency common to many gambling addicts: adherence to the “gambler’s fallacy.” This refers to the belief that wins and losses balance out over time, so a losing streak will inevitably be followed by a winning streak. This often leads to gamblers making outrageous bets on single hands thinking that “this is the one!” The gambler’s fallacy is especially detrimental to winning at blackjack, a game of skill which requires mathematical reasoning to make decisions. Emotional betting decisions have no place here.

Watanabe was known to place outrageously large wagers and hit when his chances of beating the dealer were small. According to Kristian Kunder, Watanabe’s personal attendant at Caesar’s, “he made such bad decisions at the blackjack table.” He would also play three hands simultaneously, each with betting limits up to $50,000. This further diluted his ability to make sounds decisions and provided the unique opportunity to lose $150,000 in a matter of minutes.

His inexplicable behavior at the blackjack table got so ridiculous that he became a perverse Las Vegas tourist attraction. One Vegas local told the Daily Mail: “it got to the point where people would just come to watch…There are a lot of things that make you cringe in Vegas – but I’ve never seen anything like that.” Watanabe’s awful gambling ability didn’t stop with blackjack either. He was known to throw down large sums of money on games carrying the highest house edges, such as roulette and slots.

Lessons learned from Watanabe’s tragic fall

The once-fabulously wealthy businessman destroyed his personal fortune and his family’s legacy through a combination of three factors: gambling addiction, alcoholism and terrible casino strategy. The three factors reinforced each other to create a perfect storm of gambling losses, amounting in the gargantuan sum of $127 million and a possible prison sentence. He dove headfirst into the high roller lifestyle and is now paying dearly for it.

What can we learn from Mr. Watanabe’s tragic story? First of all, do your homework. A successful gambler knows his games inside and out, knowing which games to play and which to avoid, when to bet and when to fold, when to hit and when to stand. It’s not about feeling like a big shot, but about enjoying yourself and hopefully leaving with more than you came.

Second, gambling addiction causes bettors to make horrible decisions. Watanabe’s addiction caused him to lose everything. If you are an addict, stay as far away from the casino as possible. Seek treatment. Casinos are for people looking to enjoy a relaxing recreational activity, not addicts. Thirdly, don’t drink heavily while gambling. There is nothing wrong with enjoying a drink or two at the blackjack table, but remember to keep your head clear. Playing drunk will lead you to make rash decisions and will reinforce addictive behavior. Would Watanabe have lost $5 in a single day if he hadn’t been drunk? Probably not.