Character Analysis
Watto is a parts dealer in Mos Espa on Tatooine. His character is a riddle wrapped in a mystery inside an enigma, but through careful analysis, it's possible to determine what makes this guy tick.
Oh, wait. Nope: this guy is an open book.
The first time we meet him, Watto tells us everything we need to know about his character: "I'm a Toydarian. Mind tricks don't work on me. Only money."
Yes, love of money is the root of all Watto. His greed is an obstacle for Qui-Gon, as the Jedi needs a Nubian hyperdrive that only Watto can provide. Worse, Qui-Gon has nothing Watto values to trade with. Republican credits are no good at the Outer Rim, and the Nubians have nothing of trade value.
So Qui-Gon strikes a deal with the Toydarian. He and Watto will sponsor Anakin in the Boonta Eve podrace and the terms of the deal ensure that whether Anakin wins or loses Watto will profit.
Sounds great, right? But while greed is Watto's dominant character trait, it is also his major character flaw. Not happy with winning a lot when he can win even more, Watto bets heavily on Anakin's opponent, Sebulba. Playing off Watto's greed, Qui-Gon decides he wants a piece of that action:
QUI-GON I'll take that bet.
WATTO: You what?
QUI-GON: I'll wager my new racing pod against, say, the boy and his mother.
WATTO: No pod is worth two slaves, not by a long shot.
QUI-GON: The boy, then.
When Anakin wins the race, Watto must pay out and admits to Qui-Gon that he "lost everything." Yeesh, how much did he place on Sebulba? Ever the greedy one, Watto tries to back out of the bet, claiming Qui-Gon swindled him, but the Jedi threatens to take it up with the Hutts. But even Watto isn't willing to take that bet. He gives Qui-Gon the parts he needs and releases Anakin into his care.
A Pound of Watto Flesh
But a discussion of Watto wouldn't be complete without mentioning the Jabba the Hutt-sized elephant in the room: the fact that Watto is another one of The Phantom Menace's problematic characters.
Many people have cited Watto's greed-fueled machinating and his big, hooked nose as being reminiscent of anti-Semitic propaganda. (Source)
Remember Shylock from The Merchant of Venice? That (Jewish) guy was so miserly he famously said:
My daughter! O my ducats! O my daughter!
Fled with a Christian! O my Christian ducats! (2.8.15-16)
That line hammers home the fact that Shylock cares more about money than, well, pretty much anything about as succinctly as Watto's claim that "Mind tricks don't work on me. Only money."
What do you think? Is Watto just a generically evil slave trader, or does he seem a little too Shylock-y for comfort?