Law enforcement officials have paid a visit to the offices of yet another American online gambling company. On the receiving end of a search warrant this time around is Los Angelas-based Youbet.com. Inc.
The closed-loop pari-mutuel race wagering provider reported that that it's cooperating fully with the Los Angeles County District Attorney, who served the warrant on Thursday. Youbet.com wouldn't comment on specifics, but the company says the search was part of an investigation into the legality of online and telephone wagering within California. A company spokesperson pointed out that no charges have been filed and that the Youbet.com network is still fully operational.
The investigation comes as a bit of a surprise because the company has stood on what was previously understood as solid ground in terms of its legal status. The company justifies its betting network as legal due to the fact that it offers wagers via a closed-loop system rather than the Internet.
"Youbet.com is and always has been in compliance with applicable state, federal and international laws," said Robert Fell, chairman and CEO of Youbet.com. "As a pioneer in the new category of online live event wagering, we are prepared to help inform people about our business. Interstate wagering on parimutuel horse racing has been legal for more than 20 years, as stipulated in the Interstate Horse Racing Act of 1976. Telephone wagering across state lines has been legally practiced by Ladbroke U.S.A. (the
Pennsylvania company that maintains subscriber accounts and accepts wagers from our network) as well as Penn National, the New York Racing Association, New York OTB and many others. We believe that this investigation will confirm that we are operating very much within the law as well as provide added validation of our vision of becoming the leading global brand for online live event wagering."
Meanwhile, the company's stock (listed as "UBET") has taken a bit of a hit, but has held up rather well, all things considered. It started the day slightly over $6, dipped below $5 and since leveled off at slightly over $5.
Youbet.com provides an interactive entertainment and information environment for its online subscribers. All wagers are accepted and placed by a state licensed wagering entity, currently the Ladbroke Pennsylvania facility. Youbet.com's role in the wagering process is limited to transmitting information related to the wagers to the licensed wagering facility.
The LA District Attorney's office was unreachable for comment.