The Man United and England star ran up the bill on roulette and blackjack.
See also: The world's weirdest ever bets
One witness at Manchester's 235 Casino said: "He was gambling a lot on red and seemed to be in his own world."
Gambling-mad Rooney frittered away more than £4,000 a minute on blackjack and roulette during the casino losing spree.
Onlookers said the Manchester Utd and England legend arrived at the casino alone at midnight and spent two hours switching between the two games as he knocked back beers.
Wayne Rooney playing for Manchester United
One witness said: "Wayne was being extremely reckless, laying down chips which amounted to massive bets.
"He was drinking bottles of beer. But he wasn't drunk. He was more interested in the gambling than drinking.
"He was gambling a lot on red when he was playing roulette — which seemed appropriate — and was putting long-shot bets on solo numbers. He kept losing but that just prompted him to bet more."
"He was chasing his losses, which was just making things worse for him. People in the casino were looking at him and were stunned at what was happening.
"He was cursing under his breath and seemed to be in his own little world — fixated on the tables and all the machines around them.
"He looked really down in the mouth towards the end.
"But the casino staff always look after him and he gets VIP treatment in there. He obviously earns a lot but it is still a pretty crazy amount to lose."
The spree comes after UK football has been rocked by a series of gambling scandals — including an 18-month ban for Burnley's Joey Barton over betting on matches.
Rooney's vast losses will infuriate wife Coleen, who was on a trip away with their sons Kai, seven, Klay, three and one-year-old Kit during his spree at Manchester's 235 Casino.
The pair have clashed in the past after he ran up a huge betting bill.
Wayne racked up huge gambling debts
Rooney, 31, went to the casino, where he has a private account, after United's Europa League home win over FC Rostov on March 16.
The United skipper had not played because of injury and watched the game from a box at Old Trafford.
The witness said: "It was midnight when he arrived and the middle of the week so there weren't that many people in the casino. Wayne went to the VIP area and was in there until 2am."
"He was losing thousands a minute, and hundreds of thousands per hour. It's an unbelievable amount."
Rooney, who is still officially England captain, admitted in his autobiography that Coleen had been furious when he lost £50,000 gambling early in his career.
Wayne and his wife Coleen
And she is likely to be equally angry about the latest spree.
He is a regular at the casino, whose clientele includes former footballers Rio Ferdinand and Ryan Giggs and actresses Kym Marsh and Michelle Keegan.
Rooney's account there is thought to be linked to a credit card. He met call-girl Jennifer Thompson at the gambling club in 2010.
Rooney romped with her while Coleen was pregnant with Kai. Despite the £500,000 loss, Rooney has not lost his taste for a punt.
The striker, who is the face of United's social poker betting app, was back at Casino 235 last Sunday.
This time his losses were down to £200.
He has a history of gambling woes that stretch back to his early days as a teenage star at Everton.
Rooney also wrote about how an England team-mate gave him the number of a private bookmaker and said he bet out of "boredom" when Coleen was out.
In 2008 he lost £65,000 in a two-hour session at 235 Casino.
Two years earlier it was revealed he ran up debts of £700,000 in a secret England dressing-room gambling ring.
He later denied falling out with Michael Owen over the debt. In his book Rooney told how he placed his bets by text.