Youbet.com\’s first quarter Net Income increased 31% to $1.3m on revenue up 50% to $27.8m, including contributions from International Racing Group, which was acquired in June 2005, and from United Tote, which was acquired in February 2006.
Commenting on the results, Youbet\’s Chairman, President and Chief Executive Officer, Charles F. Champion, said, “The 31% rise in first quarter net income reflects continued strong momentum in our online ADW offerings. This momentum is evidenced by Youbet\’s year-over-year \’same track\’ handle growth of approximately 26%. In addition, operating results are beginning to benefit from our revenue diversification efforts and both IRG\’s and United Tote\’s operating performance in the first quarter exceeded our expectations.”
“Youbet\’s handle improvements continue to be driven by our ability to attract and engage new customers, particularly in the age 21-40 segment, as we continue to focus on marketing programs that introduce the sport of horse racing and our wagering platforms to a broader, younger, tech-savvy audience. Along these lines, Youbet recently went live with two innovative programs focused on increasing wagering volumes through incentives and new customer acquisition. We are pleased with the initial response to both Youbet.net, our learn-to-play, play-for-points website, and Youbet Advantage, our player rewards program, and expect that these programs will help drive further improvements in our operating results throughout fiscal 2006 and beyond.”
“The recent acquisition of United Tote has broadened our revenue base while also creating opportunities for Youbet to leverage its existing technology with United Tote\’s to offer the pari-mutuel industry end-to-end solutions. Throughout the balance of 2006, we expect United Tote\’s operations to realize the benefit of pari-mutuel tote market share gains achieved over the last year. In addition, United Tote has prospects for additional new contracts over the next several quarters as it demonstrates to more customers the advantages of its industry leading pari-mutuel totalizator technology. Also, later this year, we expect to introduce the first of United Tote\’s innovative racing and sports contest offerings on our online platform, which will represent another new revenue opportunity for Youbet.”
In separate news, the Connecticut Supreme Court has upheld the right of Autotote, the company that runs off track betting in the state, to advertise telephone betting services during simulcast horse racing. The state Division of Special Revenue insisted that Autotote could not advertise telephone betting with the simulcast. But the high court, in a 5-0 decision written by Justice Peter Zarella, upheld the lower court ruling that the Autotote ads are not in conflict with state gambling laws.
Cingular Wireless has announced that two new cell sites have been installed to serve their wireless customers just in time for the Kentucky Derby. One of the sites, called Cell on Wheels, is a self-contained mobile cell site that can driven into an area to provide extra call capacity during times of high call volume such as Derby Week. “The Run for the Roses is enormously important to both Louisville residents and to horseracing fans around the world,” said Rob South, Director of Sales for Cingular Wireless in Central Kentucky. “By bringing these cell sites online in time for the Derby, Cingular hopes to help our wireless customers better enjoy the entire Derby experience, and to communicate that sense of tradition and excitement to their friends and loved ones who can\’t be at the Derby themselves.”
In the UK, the Racehorse Owners\’ Association asked a group of wealthy owners to help fund the purchase of the Tote. A first of a group of about 25 individuals were contacted by the ROA to establish whether or not they might be prepared to invest a substantial sum to secure a shareholding in a privatized Tote. “It is not the intention for a small group of the super-rich to own a large percentage of the Tote, but for a significant proportion of their initial investment to be passed on to a much broader spectrum of people and organisations,” said Michael Harris, the ROA\’s Chief Executive.
The UK Government\’s plan to sell the Tote to a racing trust at below its market value have been disrupted by the intervention of the European Commission, which indicated it regards the sale of the Tote at below its market price as an illegal form of state aid. The Government now favours the Tote\’s sale for a “full price” to be established by an independent expert, but not an open sale. Interested parties are awaiting the expert\’s valuation, which could be in the region of £400 million. The major racecourse groups, Racecourse Holdings Trust, Northern Racing and Arena Leisure, are developing their own plans for the purchase of the Tote, but the ROA believes that the Government wants the Tote to be owned by a broad spread of racing shareholders.
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