Calif.-based Youbet Assists with USAO Investigation, Details Unclear

12 October 2007

U.S. Immigration and Customs Enforcement agents on Oct. 4 searched the California headquarters of advance deposit wagering (ADW) company, the company said.

According to an Oct. 9 Securities and Exchanges Commission (SEC) filing by the company, federal agents were looking for records related to Youbet's International Racing Group (IRG) subsidiary and the wagering activities of certain IRG customers. The search was part of a larger federal investigation being conducted by the U.S Attorney's Office, District of Nevada, Las Vegas, the subject of which is not yet known. Youbet said however that it was assured that it was not the target of the investigation.

"It is important to note that federal authorities indicated that no employees or subsidiaries are the focus of this inquiry," it said in a prepared statement released on Oct. 9. "Further, has not been accused of any wrongdoing whatsoever. is assisting the U.S. Immigration and Customs Enforcement agency, the Department of Homeland Security and the U.S. Attorney's Office in an investigation involving several individuals. To that end, provided documents to officials as part of a search warrant that was served at company headquarters last week."

Natalie Collins, spokesperson for the U.S Attorney's Office, was unable to give any specific information on the investigation.

"We can't confirm or deny investigations . . . unless someone has been charged," Collins told IGN.

So, it appears from Collins' statement that at this point no company or individual has been charged in connection with the investigation.

Meanwhile, Youbet is also the subject of a lawsuit by Colonial Downs racetrack, L.P. and the Virginia Horsemen's Benevolent and Protective Association. On Sept. 19, the two parties jointly filed suit against the company claiming that it was operating in Virginia without a license. The suit seeks a cease and desist order against Youbet until it obtains a proper ADW license from Virginia.

Youbet said it disagrees with the lawsuit and intends to continue accepting wagers from Virginia residents.

Click here to view a copy of the SEC filing.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.