NEWS
Youbet.com loses more than $27-million in 2007, faces delisting
Posted: Tuesday, April 01, 2008 3:57 PM
by Frank Angst
Youbet.com is considering selling its totalizator company, United Tote, after heavy losses from its former offshore rebate shop International Racing Group contributed to a disastrous 2007, in which the Woodland Hills, California, company lost $27.37-million.
Youbet.com Interim Chief Executive Officer Gary Sproule said the company will shift its focus in 2008 to its core advance-deposit-wagering platform, Youbet Express. Sproule took over company leadership after Chuck Champion ended a more than five-year run as CEO in December.
In March, IRG secured a deal with the United States Attorney’s Office in Las Vegas to cooperate in an investigation of its players, and in return, the company will not face charges. On Tuesday, company officials said IRG, which catered to computer-robotic wagering players and other high-volume bettors, lost $13.9-million in the fourth quarter.
Those IRG losses included a $9.9-million non-cash intangible asset impairment charge and $1.5-million seized by the federal government, a seizure that as part of its settlement Youbet.com agreed not to contest. Youbet.com ceased IRG operations in February and company officials said players would have to be paid a “couple million dollars,” to square their accounts.
A non-cash impairment charge of $8-million at United Tote also contributed to losses. Sproule said Youbet.com will evaluate United Tote operations and will consider selling the totalizator service, which it purchased for $34.2-million in 2005.
“It was a challenging year,” Sproule told investors and analysts on Tuesday. “But I believe over the last several months we have made progress toward restructuring the company.”
In January, Youbet sold broadcast production company Bruen Productions back to its original owner.
As the company’s problems have mounted, its stock price has fallen. After trading for more than $3.50 a share last year, Youbet.com stock was selling for about 72 cents a share during trading on Tuesday.
Because Youbet.com stock has not sold for more than $1 a share for more than 30 days, the NASDAQ Capital Market informed the company on Monday that it will face delisting if it does not return to the minimum bid price of $1 a share by September 29.
The company did report a 1.3% increase in revenue to $138.19-million in 2007 compared with $136.4-million in ’06. Handle at Youbet Express improved 4.4% to $484.21-million but IRG handle declined 22.6% to $231.74-million.
Frank Angst is senior writer for Thoroughbred Times
