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courier-journal.com > Indiana Wednesday, October 12, 2005
State regulators cool to idea of casino gaming via satellite
By Lesley Stedman Weidenbener
lstedman@courier-journal.com
The Courier-Journal
INDIANAPOLIS -- State gambling regulators said yesterday that a company proposing to broadcast casino games from Indiana probably couldn't be licensed to do business in the state and might not be able to find a willing casino partner anyway.
In a report requested by legislators, the Indiana Gaming Commission did not explicitly endorse or dismiss Kenilworth Systems Corp.'s proposal to make Indiana casino games available to households in other states and countries.
But the commission made it clear that the offer presents significant hurdles, despite a promise of millions of dollars -- even as much as $1 billion annually -- for state government.
"If the proposal were to be implemented, it would be challenging for the state to regulate its operation," the report says.
Also, the commission said that Kenilworth failed to provide much of the information requested, making it difficult for the staff to evaluate the financially troubled company in full.
"The commission staff believes that it would be impossible to enter into a contract with any company prior to having reviewed the requested information and any other information deemed necessary," the report says.
Kenilworth officials could not be reached yesterday.
Earlier this year, Kenilworth quietly proposed to broadcast an Indiana casino's roulette wheel, baccarat and other games to gamblers' homes through a microprocessor on a TV-top box or to racetracks, off-track betting parlors, lottery locations, hotels or other sites that another state or country might authorize.
Gamblers would wager within their jurisdictions, rather than with the host casino.
State officials were somewhat wary of the idea, but Senate Appropriations Chairman Bob Meeks, R-LaGrange, was interested enough in the proposal's financial windfall that he added wording to a bill that required a study of the idea.
Meeks was not available yesterday to comment on the report.
Deal could be lucrative
Kenilworth offered to give the state 2.5 percent of its revenue from wagers -- before expenses -- with an annual maximum of $1 billion.
Kenilworth executive Herbert Lindo received a patent for the concept, which he called Roulabette.
But the gaming commission's report says that Lindo's background would be an obstacle for the company to be licensed to operate in Indiana. Lindo was convicted of felony violations of federal securities laws in 1993.
Kenilworth has said that Lindo would resign as president and chairman of the board if the company obtained a contract in Indiana. In fact, the company said earlier this year that he had retired, only to tell state gambling regulators that he remained.
Regardless, "Mr. Lindo's resignation would not solve Kenilworth's suitability problems," the commission's report says.
That's because the commission also has strict standards for those who hold any direct or indirect interest in or own 5 percent or more or a company the commission regulates.
"Even if Mr. Lindo gave up his control over the company, he has not indicated that he would be willing to give up his beneficial ownership," the report says.
Among other issues cited in the report:
The Department of Justice might determine that the company's Roulabette system violates federal laws that prohibit Internet gambling in the United States.
The commission asked Indiana casinos whether they were interested in being a host site for Kenilworth broadcasts. "The unanimous response was 'no,' " the report says.
Company documents filed with the Securities and Exchange Commission indicate that Kenilworth has "virtually no equity or liquidity." The company has not had any revenue since it emerged from bankruptcy in 1998
State regulators cool to idea of casino gaming via satellite
By Lesley Stedman Weidenbener
lstedman@courier-journal.com
The Courier-Journal
INDIANAPOLIS -- State gambling regulators said yesterday that a company proposing to broadcast casino games from Indiana probably couldn't be licensed to do business in the state and might not be able to find a willing casino partner anyway.
In a report requested by legislators, the Indiana Gaming Commission did not explicitly endorse or dismiss Kenilworth Systems Corp.'s proposal to make Indiana casino games available to households in other states and countries.
But the commission made it clear that the offer presents significant hurdles, despite a promise of millions of dollars -- even as much as $1 billion annually -- for state government.
"If the proposal were to be implemented, it would be challenging for the state to regulate its operation," the report says.
Also, the commission said that Kenilworth failed to provide much of the information requested, making it difficult for the staff to evaluate the financially troubled company in full.
"The commission staff believes that it would be impossible to enter into a contract with any company prior to having reviewed the requested information and any other information deemed necessary," the report says.
Kenilworth officials could not be reached yesterday.
Earlier this year, Kenilworth quietly proposed to broadcast an Indiana casino's roulette wheel, baccarat and other games to gamblers' homes through a microprocessor on a TV-top box or to racetracks, off-track betting parlors, lottery locations, hotels or other sites that another state or country might authorize.
Gamblers would wager within their jurisdictions, rather than with the host casino.
State officials were somewhat wary of the idea, but Senate Appropriations Chairman Bob Meeks, R-LaGrange, was interested enough in the proposal's financial windfall that he added wording to a bill that required a study of the idea.
Meeks was not available yesterday to comment on the report.
Deal could be lucrative
Kenilworth offered to give the state 2.5 percent of its revenue from wagers -- before expenses -- with an annual maximum of $1 billion.
Kenilworth executive Herbert Lindo received a patent for the concept, which he called Roulabette.
But the gaming commission's report says that Lindo's background would be an obstacle for the company to be licensed to operate in Indiana. Lindo was convicted of felony violations of federal securities laws in 1993.
Kenilworth has said that Lindo would resign as president and chairman of the board if the company obtained a contract in Indiana. In fact, the company said earlier this year that he had retired, only to tell state gambling regulators that he remained.
Regardless, "Mr. Lindo's resignation would not solve Kenilworth's suitability problems," the commission's report says.
That's because the commission also has strict standards for those who hold any direct or indirect interest in or own 5 percent or more or a company the commission regulates.
"Even if Mr. Lindo gave up his control over the company, he has not indicated that he would be willing to give up his beneficial ownership," the report says.
Among other issues cited in the report:
The Department of Justice might determine that the company's Roulabette system violates federal laws that prohibit Internet gambling in the United States.
The commission asked Indiana casinos whether they were interested in being a host site for Kenilworth broadcasts. "The unanimous response was 'no,' " the report says.
Company documents filed with the Securities and Exchange Commission indicate that Kenilworth has "virtually no equity or liquidity." The company has not had any revenue since it emerged from bankruptcy in 1998
