Washington Approves Youbet.com

The Horse Racing Commission for the state of Washington on Thursday granted a license to California-based interactive wagering provider Youbet.com. The approval comes nearly a year after the state authorized advanced deposit wagering (ADW) for its residents.

As part of the deal, Youbet.com agreed to pay $400,000 to the state for wagers it had taken during the last year (prior to receiving a license) from Washington residents. The commission said the money will be paid back into the racing industry in the state.

Some members of the commission expressed concern prior to approving Youbet.com because the company, as far as the commission is concerned, had been taking bets illegally in Washington.

But Chairman Gary Christenson said the commission was left no other option to ensure that the state's horseracing industry gets a share of the revenue it deserves.

"By giving Youbet.com a license, we are insuring that the state of Washington is getting the money that's due it," he said. "If we didn't give them a license, it wouldn't guarantee that they'd stop. We didn't turn a blind eye because we did include their need to pay us back."

Investigators believe Youbet.com was taking in about $12 million a year in bets placed from Washington.

The commission acknowledges that Youbet.com probably isn't the only online operator that's been accepting bets from Washington residents since the ADW law was passed.

Robert Leichner, the commission's executive secretary, and Rick Day, director of the Washington State Gambling Commission, both said it's unlikely that any action will be taken against other operators who violate the law. Any enforcement wouldn't begin, they said, until the commission has completed issuing licenses to new operators.

"If there were other companies that continue to bet illegally," Day said, "then we will move forward with an investigation against those companies."

If actions are to be sought against illegal operators, Day said, the Washington State Gaming Commission would have to get involved in the process.

Youbet.com, meanwhile, isn't convinced it has violated any law.

"Any activity that we have or haven't been doing has been with the full knowledge of everyone in that room," Scott Solomon, an attorney for the company, explained. "If we weren't bullish on the Washington market and the Washington horse racing industry, we wouldn't be here today,"

Youbet.com is the third officially licensed operator of ADW wagering in Washington; the others are TVG of Hillsboro, Ore., and Magna Entertainment of Canada.

Under a revenue sharing plan with the operators and the racing commission, TVG has paid more than $542,000 back to the state on the $5.7 million in bets it has taken in since becoming licensed. Magna has paid back $178,000 on $2.4 million in bets.

With the addition of Youbet.com as an approved operator, the commission said it now has agreements with the companies that are doing the majority of business with state residents.

Washington's law, the state's first expansion of legal gambling (outside tribal casinos and the state lottery) since 1997, also allowed bets placed by telephone and expanded betting on races broadcast at Emerald Downs, the state's only top-tire horse track, and its 21 off-site betting parlors. Internet gambling companies must sign a contract with the track before they become eligible for a racing commission license.

Officials with Emerald Downs share Leichner's views on why Youbet.com should receive a license.

"We agree they should not have been taking bets in the state, period," Emerald Downs' owner Ron Crockett said. "But they did."

Crockett expects the track to post its first profitable year since he bought it 10 years ago, and he credits the new ADW law with the turnaround.

The $400,000 from Youbet.com and all future payments to the state from the three companies will be split among the racing commission, accounts for horse owners and breeders and Emerald Downs.