Q&A: David Marshall, Youbet.com

Six weeks ago, David Marshall returned to the company he co-founded, Youbet.com. His appointment as CEO came about as part an exchange: In return for loaning the company $750,000, Marshall received the top post and an overhaul of the board of directors.

Youbet.com specializes in offering real-time betting on horse racing. It is one of three licensed to do account wagering in California.

With this year's Kentucky Derby still a fresh memory, IGN thought it was a good time to check in with Marshall to see how things are going with the new regime.

IGN: The Kentucky Derby was last weekend. How important is it to use what is arguably the most recognizable horseracing event in the United States as leverage for getting new customers to the YouBet.com system?

David Marshall: I think we are getting a lot of folks out there that didn't know we existed and weren't aware that we were legal. We were able to get agreements signed with Churchill Downs and get our commercials airing on the signal.

There are a lot of folks out there didn't know that they could bet online with someone and not really have issues with money getting paid to them or disappearing offshore. We are part of the racing industry, and an event like the Derby is a perfect time to show that to the betting world. Our bets are actually going into the racetrack pools, so someone sitting at home and betting with us will have their bet calculated in the pari-mutuel pool within 20 seconds.

IGN: Having talked with other operators around the world, it seems to me that the Derby doesn't have the global reach and allure that races like the Grand National do. Do you see a lot of growth room for the Derby?

Marshall: I think it is clear that if you are in the U.K., the Derby may not be the biggest race of the year. If you are in Hong Kong it certainly isn't the biggest race of the year. But if you are in the United States, there is no doubt that it is the biggest race of the year. The Kentucky Derby and the Breeders' Cup are the two biggest races of the year in the U.S. It depends on who you are and where you live.

IGN: Do you ever see a time when the Derby isn't the biggest race of the year, but at least compares to the interest that is created with the National or similar races in the U.K.?

Marshall: If you mean total handle, I don't know the numbers but I would venture that more people will bet on the Kentucky Derby than will bet on those other races.

Just from a national population side of things, I think there will be more bets generated from the Kentucky Derby than any other race of the year, anywhere in the world.

In Hong Kong, the average bet is much higher than the average bet in the U.S. If you look at the numbers going through Hong Kong, they are greater than what is generated in the U.S. But if you look at the number of people, I think that the Derby has more folks participating.

What we get on Derby Day is a lot of folks who only play the races a couple times a year and aren't betting a lot of money. They are just having a good day at it and having some additional fun with the event.

IGN: How important is it for you to transform them from those couple-of-times-a-year bettors to people who are using your system regularly and following the races?

Marshall: I think that is where we are getting a lot of support from the horse racing industry. We can capture those people online and have a great chance of increasing their frequency during the year. That is our whole goal. If we can increase their frequency during the year, they are going to want to go to the track even more.

IGN: It has been about six weeks since you re-joined the company. How are thing going? Do you feel you have the company headed in the right direction?

Marshall: We had a few short-term goals when I came back. One was to restock the board and put new folks on the board of directors. We have done that. Another one was to improve our management and we brought in Chuck Champion to reach that goal. Chuck has got to be one of the top managers in the country as far as I am concerned.

He is our president and comes from the magazine industry. He ran the Chicago Sun-Times operation and has a very strong background.

We have improved the efficiency tremendously internally in terms of our marketing, customer service and our operations. We are seeing results from that in terms of our handle, which, as I mentioned, has been going up.

In terms of our marketing, the whole focus has been in working with the horse racing industry. For us that is a key because we are legal in the United States and we are partners with all these tracks. So for us that was important.

IGN: Safe to say that you will try to continue on with that direction?

Marshall: Yes. It has only been six weeks, and we couldn't solve all of our problems at once but we are getting there. I am feeling pretty good about things. We hope to have some more partnerships announced in the near future that will expand our business even more.

We have a couple of other issues that we need to resolve in terms of the efficiency of our operations and in terms of the effectiveness of our marketing. But we are certainly making great strides in that direction.