Interactive Race Wagering in North America

Los Angeles-based Youbet.com is one of the best known interactive horse racing service providers in North America, and certainly one of the largest, boasting nearly 15,000 customers. The company began developing its totalisator system in the mid-80's and became the first to offer online pari-mutuel wagering with the launch of its You Bet Network in 1998.

Nineteen ninety-nine proved to be an eventful year for the company. Various Los Angeles law enforcement officials raided the company's office in October as part of an investigation into the legality of online and telephone wagering within California. The issue, according to Loren Michael Naiman, Los Angeles deputy district attorney, was "whether attempts by companies like Youbet to skirt the law do successfully get around state and federal legislation against gambling."

The investigation ended in January 2000 with a high-priced settlement. While no issues of law or fact were determined under the settlement, the company agreed to fork over $1,308,250 in court costs, civil payments and contributions to the Los Angeles County Education Foundation and the California Council on Problem Gambling. Pursuant to the settlement, the company no longer handles wagers from California subscribers, and until state law is clarified, California customers will only be able to receive Youbet's information services. Additionally, the company agreed to move out of the state certain equipment that might be considered to record wagering information.

Business has taken on a rosier outlook for Youbet since then. Most recently, the company announced the purchase of Ladbrokes' bingo and off-track wagering operations in Argentina for $26 million in cash and notes. CEO Robert Fell called the deal "an important initial step in Youbet.com's international strategy of building the definitive global brand for online gaming."

Earlier this month, Youbet revamped its website to offer improved navigation based on historical hit rates, a greater focus on sampling and new member sign-ups, clearer billboard areas and an overall updated appearance.

Following is a breakdown of Youbet's services:

URL:		www.youbet.com
Address:		1950 Sawtelle Blvd. Suite 180 Los Angeles, CA 90025 Ph: 310.444.3300 Fax: 310.444.3390
System:		Customers wanting to use Youbet need to set up an account and download the software provided from a Youbet CD-ROM. After downloading the software, customers can access the Youbet system for information and wagering purposes. Youbet's network is accessed via telephone lines, but all transmissions are accomplished using Youbet.com's private intranet. The Youbet account is charged to the customer's credit card account. Luckily for all involved, the closed-loop system is considered legal even under the Kyl and Goodlatte Internet gambling prohibition proposals before Congress. Last year, the company released an upgraded version of it's software.
Fees:		Customers pay a $5.95 monthly access fee, plus 75 cents per day per track to obtain past performance data. New customers receive one month's free access upon signing with Youbet.com.
Benefits:		Customers receive 24-hour unlimited Internet access for live audio and video broadcast from more than 30 harness and/or Thoroughbred tracks, but no greyhound races are included. Youbet offers commingled track pools, value-added handicapping products, all track programs, live odds for all tracks, late changes, real-time exotic probable pay-outs, past performances and account wagering services via Ladbrokes USA.
Tracks available:		Youbet provides live odds, downloadable and printable programs and past performances for the following member tracks. Also, wagering on all of these tracks is possible using Ladbrokes telephone system. Of these tracks, a few do not provide live audio/video or may not be available for online wagering. Youbet tracks: Australia, Bay Meadows (CA), Beulah Park (OH), Cal Expo (CA), Calder Race Course (FL), Churchill Downs (KY), Colonial Downs (VA), Del Mar (CA), Delaware Park (DE), Delaware Country Fair (OH), Delta Downs (LA), Dover Downs (DE), Dubai World Cup (UAE), Ellis Park Evangeline Downs (LA), Fair Grounds (LA), Fairplex (CA), Fort Erie (ON), Fraser Downs (BC), Freehold (NJ), Garden State Park (NJ), Golden Gate (CA), Gulfstream (FL), Harrington (DE), Hawthorne (IL), Hialeah Park (FL), Hollywood Park (CA), Keeneland (KY), Ladbroke at the Meadows (PA), Laurel Park (MD), Louisiana Downs (LA), Meadowlands (NJ), Monmouth Park (NJ), Northern California Fairs (CA), Northfield Park (OH), Northville (MI), Oaklawn Park (AR), Penn National (PA), Philadelphia Park (PA), Pimlico (MD), Pocono Downs (PA), Pompano (FL), Prairie Meadows (IA), Remington Park (OK), Rockingham Park (NH), Sam Houston (TX), Santa Anita Park (CA), Sportman's Park (FL), Tampa Bay Downs (FL), Turf Paradise (AZ), Turfway Park (KY), Woodbine (ON). The following track/states have account wagering simulcast restrictions: Bay Meadow, CA- CA, KY, OR & MD residents; Golden Gate, CA - CA residents; Santa Anita, CA - CA residents; Gulfstream, FL - KY, OR & MD residents; Turfway, KY - KY, OR & MD residents; Remington Park, OK - OK residents; Sam Houston, TX - TX residents; Woodbine (H), ON - ON, PQ, NF, NB, NS & PE residents.
Exceptions:		Customer accounts refused from: AK, CO, GA, HI, MS, MO, NV, NC, SC, UT, PR, VI. Account holders must be aged 18 or older.
Partners:		Ladbrokes USA provides wagering services; Equibase provides racing information; Thoroughbred Sports Network provides horse track racing information; Axcis/Trackmaster provides past performance thoroughbred handicapping information.
Wagering:		Customers wanting to place wagers online must have an account with both Youbet.com and Ladbrokes. Wagering accounts can be set up through Youbet or by contacting Ladbrokes directly. Youbet accounts must be charged to a credit card, while a Ladbrokes account can be set up using credit cards, check or money orders. Suggested minimum deposit for a wagering account is $50, and there is no charge for wagers. Youbet.com stresses that its role in the wagering process is limited to transmitting information to the licensed wagering facility. (In this case, Ladbrokes is the facility, which is licensed in Pennsylvania.) Even the wager races! According to Youbet, online wagering transactions take about 3 seconds from the time it's entered on the punter's computer, transmitted to Ladbrokes and finally, an acknowledgment is returned to the customer's PC.
Stock activity:		Youbet stock is traded on the NASDAQ using the symbol "UBET". Stock prices have swung widely over the last year. The 52-week high (according to Yahoo Financial pages) was May 21, 1999 showing $24.25 per share, while the 52-week low was Oct. 18, 1999 showing $3.313. The last few months, however, have seen Youbet.com's stock value hovering in the $4 range.
Revenues:		Robertson Stephenson analyst Harry Curtis suggested in February that Youbet should generate a 30 percent secular growth over the next three years. In the nine months ending September 30, 1999 company officials reported an increase in revenue from $98 thousand to $23 million. Additionally, the net loss increased by 22 percent, hitting $13.7 million. Youbet reported revenue of $1.4 million for its fourth quarter ended Dec. 31, up from $165,000 a year ago, with net loss of $10.8 million for the quarter, up from $2.6 million a year earlier. The company's cash balance as of Dec. 31 was $62.3 million, with 14,500 subscribers, up 26 percent, who bet $61 million in 1999. Youbet's revenues are derived in three ways: The $5.95 monthly subscription fee charged Youbet customers; Income from sale of handicapping information, which can range in price from 75 cents to $25, depending on the information purchased; and Ladbrokes pays a fee equal to 50 percent of net commissions derived from Youbet's subscribers' wagers to Ladbrokes.

Interactive Race Wagering in North America - Youbet.com