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 October 5, 2006 OUR CURRENT PROGRESS AND PLANS FOR MARKETING ROULABETTE™ Subscribers to digital satellite and digital cable television and broadband Internet in the United States and other industrialized countries of the world will soon be able to bet as they watch live, in-progress casino table game action on their television screens. Viewers will be able to wager exactly as if they were in the casino playing at the table. >> See demo! Background The "Bet As You Watch Casino On TV" service called "Roulabette™" was developed by Kenilworth Systems Corporation ("Kenilworth"), a New York State organized Public Company in 1968 (1934 Act Company), with the ticker symbol "KENS". Roulabette™ will be primarily deployed in conjunction with Lottery Systems, both in the U.S. and foreign countries. Digital satellite, digital cable and high speed Internet subscribers will be able to go to their local Lottery agents and make deposits and/or collect winnings, in the same manner as if they are purchasing lottery tickets, using pre-encoded "Roulabette™ Play Cards" inserted in the Lottery terminals. The Roulabette™ programs will include casino entertainment and commentators (much like commentators of sporting events and poker tournaments) in order to assist players with the rules and strategies of the games. A Highly Regulated Initiative Exclusively licensing lotteries and their operators for the cash deposits required for wagering on the programs allows Kenilworth to ensure that the under aged won’t participate in the casino action. Lottery terminal operators must observe the minimum age laws under criminal penalties. A special effort will also be made to identify compulsive gamblers. By monitoring all wagering action with the lottery data system, the system will be able to identify problematic gamblers and limit or shut down their obsessive gambling habits. Lottery regulations will set limits on how much a player may wager over a specific period of time to identify compulsive gamblers. Throughout the United States and the rest of the world lotteries are owned by government agencies or non profit charitable agencies that distribute the net earnings to benefit social and charitable programs, or by private entities that pay a percentage of their net win to designated government agencies. These foreign lotteries also have the same databases as lotteries in the United States and most lotteries throughout Europe pool their lotteries between countries, the same as Mega Millions and PowerBall in the United States, which makes the distribution simpler and very cost effective for both Kenilworth and the lotteries. In order to help discourage children to watch parents play Roulabette™ the programs could be aired evenings only after 9:00 pm or as otherwise directed by the states and foreign jurisdiction government authorities. Unique Patents In June 2003, Kenilworth was granted a U.S. Patent # 6,575,834 B1 titled "System and Method For Remote Roulette and Other Game Play Using Game Table at a Casino.” The patent has been filed in 49 industrialized countries throughout Asia, and Europe, including most of the Russian republics. Two additional Patents for the Lottery terminal wagering #2005/0085291 and #2005/0085293 titled: “Method and System for Supplying Funds to a Terminal for Remote Wagering” have been published by the U.S. Patent & Trademark Office. A fourth patent has been filed and will be published in April 2007 for playing Roulabette™ on video lottery terminals and slot machines. The four Patents may be viewed by clicking here: http://www.kenilworthsystemscorporation.com/patents.html Technology Kenilworth 's technology involves a microprocessor that is incorporated in the TV set top box used by the viewer to receive the digital satellite, digital cable and high speed Internet broadcasts. The microprocessor manages the wagering (i.e., Roulette, Dice, Baccarat and more). Actually, all the wagering takes place between where the players sit and the set top box for the TV or any TV set anywhere that has the Kenilworth microprocessor available. Roulabette™ satellite broadcasts cannot be hacked or manipulated, it requires elaborate up and down link satellite dishes for sending the game signal around the world, which would have to be duplicated and is impossible to hide via the Internet. Lotteries use private data system to monitor the Lottery and Roulabette™ transactions, and to connect Lottery terminals within the states and foreign jurisdictions. All broadcasts and transactions are encrypted to prevent theft of data. Roulabette™ may be played at home, in hotel/resort rooms and public gathering places, such as racetracks, OTB Parlors and restaurants. Roulabette™ terminals at racetracks and restaurants are TVs, with the Patented built-in microprocessors managed by the cashier's station on the premises, or the appropriate lottery’s data system. All participants, casino owners, Lottery agents and Lotteries who provide Roulabette™ play action will share in the net win revenue derived from wagering. (Net win is revenue from wagers, less winnings paid to players.) The casino wagering and entertainment shows will be bundled into packets, and spot presented in the same manner as broadcasts of current news events are reported. OUR FIRST BROADCAST SITE The Status with PAGCOR During January 2006, the Company reestablished negotiations with the Philippines Amusement and Gaming Corporation (“PAGCOR”) for permission to broadcast live, in-progress casino table games from their casinos. PAGCOR is the Republic of the Philippines chartered government gaming monopoly. PAGCOR partially owns and exclusively operates all fourteen (14) Filipino casinos throughout the country, some of which are located in exclusive resort facilities frequented by Asian patrons (tourists and casino gamblers). LIVE GAME TEST In March 2006, Kenilworth conducted a live, in-progress casino table game test to demonstrate the ability to broadcast the table games, for around the world viewing, without disrupting the normal security monitoring and protecting the privacy of players at adjoining table games. The film clip of the test broadcast which was made at a roulette table located in the new Hyatt Hotel and Casino, Manila, is available for viewing; click here to view the live game test: www.kenilworthsys.com In April 2006, Kenilworth guaranteed to pay PAGCOR monthly payments, for hosting the broadcasts when they commence, for a contract period of ten (10) years; US $1 million for year one (1); US $2 million for years two (2) and three (3); US $5 million for years four (4) through seven (7) and US $10 million for every year thereafter, totaling US $636,000,000 over the ten (10) year period. The payments have to be made regardless from where the broadcast emanates. Kenilworth requires the flexibility to broadcast from other casinos besides the Philippines. In July 2006, PAGCOR granted us to commence the first live, in-progress casino table game broadcasts to emanate from the new Hyatt Hotel & Casino in Manila, Philippines. We have acquired the broadcast site for Roulabette™. Now we have to obtain agreements from jurisdictions that will permit to receive the broadcasts. Roulabette™ in the U.K. Parliament, on April 5, 2005, approved for England one of several proposed Las Vegas style casino, and Remote Fixed Odd Wagering, which are for casino type games such as Roulette, Dice, Baccarat, Blackjack and other typical games. (Prior thereto, only pari mutual wagering on horse races and sporting events between different teams, local and international, were permitted.) There are no pari mutual games taking place in casinos, except in Nevada that permits patrons of the casino to wager on simulcast horse/dog races that may take place anywhere around the world. Roulabette™ in the United States Playing Roulabette™ does not violate Federal or State's gambling Statutes, such as the 1961 U.S. Wire Act (18 U.S.C. 1084) and states’ prohibitions of Internet wagering. Roulabette™ wagering is transmitted via satellite broadcasts and downloaded to cable networks in each state or foreign jurisdiction. It does not make use of any wire communication or the Internet except in foreign countries that permit Internet wagering. All wagering takes place within the states or jurisdictions in which Roulabette™ is played and actually managed between the television set and where the player sits to play the games. (Approximately ten [10] feet apart.) All wagering takes place within the states or jurisdictions. It is not unlike simulcasting of horse/dog racing events across State Borders (Jurisdictions) permitted by the Interstate Horseracing Act of 1978, 15 U.S.C. 300 et seq., which specifically allows the simulcast of horse/dog races. Legislative comments to this Act include findings that "(1) the States should have the primary responsibility for determining what forms of gambling may legally take place within their borders; (2) the Federal Government should prevent interference by one State with the gambling policies of another, and should act to protect identifiable national interests; and (3) in the limited area of interstate off-track wagering on horse races, there is a need for Federal attention to ensure States continue to cooperate with one another in the acceptance of legal interstate wagers. INTERNET GAMBLING VIOLATES The 1961 Wire Act (18 USC 1084) – An act of Congress prohibits Internet gambling. We have available on our website an Opinion Letter from Greenberg Traurig, an International Law Firm which responded to our request on using one-way satellite broadcast which does not violate the Wire Act. Roulabette™ satellite broadcasting has no wires and the wire that may be used to manage the wagering, by state authorities within their state, fall under The State Rights Act. Please click here to view the Opinion Letter from Greenberg Traurig: THE POTENTIAL MARKET To estimate the potential net revenue available from revenue sharing between the various entities participating with Roulabette™, Kenilworth computed actual results from satellite gaming platforms, in England and Ireland. One of the four (4) Satellite Television providers in Europe, with a subscriber base of 7.7 million at March 31, 2005, of which 3.2% of their subscribers or 300,000 are steady bettors on horseracing and soccer games (pari-mutual wagering). The average bettor wagers an equivalent of $3,200 annually. The Director of Gaming of the satellite TV company opined that with the addition of fixed odds casino betting on live casino games, he expects the number of subscribers who will wager to increase to 10% to 12% of the present subscriber base. The other three Satellite Television providers have approximately 8 million subscribers. In Asia, there are 170-million satellite and cable subscribers. In the United States, there are a total of 22.7-million satellite subscribers. The potential is a projected $7.36-billion market. And, if you add in the 70 million U.S. cable subscribers, we estimate a $100-billion market beckoning just from Roulabette™ live casino game play. The Justice Department reported in 2002 that illegal wagering on everything from sports betting to Internet virtual casino wagering in the United States during 2001 amounted to $300-billion. It has not released any other estimates since. By contrast, illegal U.S. virtual Internet wagering of casino games last year (2005) was estimated to be between $10 to $15 billion, and estimates for 2006 reach to $25 to $30 billion according to casino gaming sources. We are projecting as more subscribers for Roulabette™ wagering increases, the virtual Internet market will decline and disappear. Why would anyone play along with a virtual make believe casino game when they can play along with Real Time live casino games instead, without having to travel to a casino? There are 120 million TV subscribers in the United States and more than 300 million subscribers throughout the rest of the industrialized world. On average, households in the U.S. and other countries have 2 ½ television sets (TV’s). (The satellite, cable and high speed Internet companies will charge a separate fee for transmitting the table games). Public gathering places can accommodate unlimited TV sets with a simple satellite receiving dish or direct cable and high speed Internet connections. With wagering possible in homes, hotel rooms, resort rooms via in house movie network, pubs, restaurants, race tracks and other public gathering places the Company believes it will become a more than $500 billion Net Win Market throughout the industrialized world by the year 2011. Kenilworth’s revenue share may be $100 billion net after operating costs, foreign and domestic taxes. To best market the casino games, the Company is selecting lotteries throughout the world to manage and operate the distribution and cash handling (deposits to play and paying winnings) using the lotteries’ existing databases for the sale of lottery tickets, and paying winnings at regular lottery licensed terminal locations. Kenilworth will share the net win revenue with all participating entities that provide Roulabette™ gaming without costs of any kind. Lotteries will receive a minimum of forty percent (40%) of the total net win from their respective jurisdictions. We retain thirty percent (30%) and pay all operating costs. The remaining thirty percent (30%) is shared with other participating entities. In States and foreign countries that designate exclusively lottery proceeds to school and their teachers it is a welcome contribution. It also may help close budget gaps. ROULABETTE ™ AT RACE TRACKS Throughout the United States there are more than five hundred (500) facilities that provide simulcasts of live in-progress horse/dog races. At the track facilities there are large TV screens that show the races from the different tracks with general theater type seating. Most race tracks offer private television sets outfitted with touch screens for their patrons, to wager on the simulcast races. After players open an account and select pin numbers, they can watch each race offered on the different, out-of-state tracks on the TV and place wagers on the different races by simply changing channels. The players may also watch sporting events, the news, the Stock market reports, and in the near future play along with Roulabette™, live, in-progress casino table games. The simulcast centers have their own databases to manage the cash deposit and pay winnings on the horse/dog races and will be able to manage the casino games, on the same system as the lotteries will manage Roulabette™. With fifty to one hundred fifty (50-150) private TV’s, available in simulcast horse/dog race centers, it will be a substantial revenue generator for the track, horse/dog track, horse owners and Kenilworth. OUR CASINO GAMING HISTORY In 1990, we developed and delivered for the TAB (Totalizator Agency Board) a quasy government agency of the State of Victoria, Australia, a cashless slot machine system. By making use of the expertise applied in the development of the aforementioned systems we develop the second-generation system, Roulabette ™ that will manage the wagers by the microprocessor installed in TV set-top boxes to receive satellite broadcasts. This would allow a player in an interactive manner, at a remote location (outside the casino confines), to experience the actual play and excitement at the casino table game and to make wagers on the various games, without having to be physically present at the casino or casino table. OUR ROULABETTE™ SLOT The Roulabette™ Slot will combine regular slot machines and video lottery terminals, both of which are pre-programmed to switch games by the touch of a button, to Roulabette ™ live in-progress casino table games. It will offer slot player a change of pace at the cost of a slot handle pull. The games are transmitted to the Roulabette™ Slot via satellite or the high speed Internet (all broadcasts are encrypted to prevent unauthorized use of the broadcasts). There are now believed to be more than ten (10) million slot machines played throughout the world. ILLEGAL GAMBLING Illegal gambling is thriving in the most populated markets The United States, China, India and the Pacific Rim Nations. Roulabette™ wagering may receive early acceptance in China. The Government will be able to control the amount of the wagering and more importantly, can determine the source of the funds (wagers). The same scenario may be said of India. We believe the Chinese Government does not wish their constituents to visit Macau. Macau represents all that Las Vegas has to offer and is entirely American. China controls and restricts (censors) all news services, foreign newspapers, magazines and all publications that do not meet their ideology. They are readily available in American operated casino in Macau. China’s economy is advancing at an astonishing pace but remains a Communist society, despite joining the World Trade Organization (WTO). The Chinese Government views Macau as a “stop over” for tourists that visit China, a virgin destination and for other affluent Asian gamblers. All of our patents, filed in the forty-nine (49) industrialized countries in the world, provide for transmitting remote, live in-progress casino table games via telephone lines, Internet and satellite (satellite primarily for the U.S. market). Using broadband, Internet is simpler and more economical to operate than using satellite transmission. Roulabette™ offers content to the broadcasting industry and is a medium for local, state and international advertisers. According to Wang Xuehong, head of the China Center for Lottery Studies of Beijing University, revenue from illegal casinos and virtual casino table games using the Internet in China, in 2005, reached 70 billion Yuan ($87.5 billion US dollars). In order to gain a break through and the maze of regulations we must demonstrate the viability of Roulabette™ by broadcasting the live games from the Hyatt Casino in Manila for viewing by cable, satellite and high speed Internet subscribers, initially without participating in actual gambling. Similar to poker and now blackjack tournaments that are offered for viewing only. Roulabette ™ is a complete comprehensive television show, which will also appeal to non-players. Legislators and concerned citizens opposed to the spread of casino gambling via the Internet. They may agree that $0.25 wagering, with strict daily, weekly or monthly limits imposed by state regulators, may find Roulabette™ entertainment more acceptable than the spread of all other gambling. ILLEGAL SPORTS BETTING In 2002, the Department of Justice (DOJ) reported that illegal wagering on everything from sports betting to Internet virtual casino wagering in the United States during 2001 amounted to $300 billion. The DOJ has not issued any estimates since. Recent action by State and Federal agencies have clamed down on foreign organizations that offer sports wagering to United States residents. Obviously, the action taken to date indicates the amount wagered in 2001 has greatly increased. Then, why not legalize online gambling and collect the tax dollars that now escape taxing authorities. TOURNAMENT PLAY As Kenilworth moves forward with the acceptance of Roulabette™, we plan to offer casino games as limited tournament play. For a cash amount determined by Lotteries, viewers would be able to sign up with their lottery operators to make wagers on casino table games. For example, an initial $25.00 payment would provide for thirty (30) wagers on any game offered, mixed and matched. Individuals would have a chance to win as much as $1 million during a specific tournament game period. As more “play along” with Roulabette™ lottery casino games develop throughout the word, the prizes could be increased to more substantial and exciting proportions. The limited tournament play games can be scheduled more than once a day, during specific hours of the day, on specific days or nights of the week or once or twice a month. Experience will determine scheduling. The worldwide tournaments would be similar to “Mega Millions” or “Powerball”, multi-state lotteries currently played in the United States and pooled in Europe.
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©Copyright 2004 Kenilworth Systems Corporation