In the wake of the biggest upset in Belmont Stakes history, TVG has beefed up by exercising its warrants from a deal with Youbet.com inked over a year ago.
Television Games Network, the Los Angeles-based indirect subsidiary of Gemstar-TV Guide, fresh off broadcasting the Belmont Stakes, is just now taking advantage of the first set of warrants, which entitles the group to acquire equity in the form of stock of Youbet.com.
TVG and Youbet.com, two of America's biggest online betting operators jockeyed the deal in March 2001, which gave Youbet.com access to utilize TVG's patented wagering technology for online and automated telephone applications as well as a right to video stream and accept online pari-mutuel wagers on horse racing from virtually all of TVG's exclusive partner racetracks.
The first warrant gives TVG the right to acquire 16.6 percent of Youbet.com shared common stock and the option of buying 3,884,650 shares for one-tenth of a cent per share as part of the licensing agreement.
TVG has a second warrant it has yet to exercise, which allows the company to purchase up to 51 percent of Youbet.com's common shares. The second block of stock can be purchased any time on or before May 18, 2004 and if exercised would generate approximately US$40 million for Youbet.com.
TVG already receives royalties from wagers on specific tracks via the Youbet.com Web site.
Officials with Youbet.com believe that by exercising the first warrant, TVG is recognizing Youbet.com's success in developing an efficient and easy-to-use online wagering Web site.
"We are pleased that TVG has recognized our success in growing Youbet.com's
product offerings and building a dynamic management team," David Marshall, CEO of Youbet.com, said.
The Youbet.com network provides customers with wagering accessibility as well as live coverage of all major racetracks in 40 states.
Youbet.com maintains a strategic relationship with TVG as well as MEC Pennsylvania Racing, the hub of the Magna Entertainment Corp's operation based in California. Youbet.com is the official online wagering platform for Churchill Downs Incorporated and the Kentucky Derby. The company also operates TotalAccess, TVG's Oregon-based hub for the acceptance and placement of wagers.
Of the three wagering licensees of California, Youbet.com is the only licensee to offer access to races carried by both Magna and TVG, the other California licensees.
Although the three licensees may be competitors, they are pooling their resources to provide efficient and easy-to-use domains for online wagering.
Magna, which recently acquired Flamboro Downs near Toronto, continues to expand its land-based operations, while the other two focus exclusively on interactive betting.