Youbet Reports Solid Results, Responds to House Activity

During a conference call on Thursday with analysts and investors, officials with Youbet.com announced record highs for stock earnings and said they were optimistic that horseracing would be protected if an Internet gambling prohibition bill is passed in the U.S. Congress this session.

The company's CEO, Chuck Champion, was asked during the call where Youbet stands in regards to a prohibition bill in the House of Representatives that was passed out of committee on Wednesday.

"We have been in contact with individuals on Capitol Hill and we are confident that if the (Leach) bill is passed, it will include the exemption for horseracing." - Chuck Champion

The bill is aimed at cutting off credit cards, and other instruments of banking, from the online gaming industry. The legislation had contained carve-outs for horse and dog racing, as well as state lotteries, bingos and other industries, but an amendment removing all the carve-outs was introduced Wednesday and subsequently passed.

Despite the potential loss of the racing exemption, Champion said horse racing was going to be OK.

"We believe in the final analysis that we won't be affected by that," he said. "We have been in contact with individuals on Capitol Hill and we are confident that if the (Leach) bill is passed, it will include the exemption for horseracing."

Youbet's recent performance has execs optimistic as well. The gross handle for the first quarter of 2003 set a new record at $61 million, up substantially from $27.1 million in the first quarter 2002. March 2003 was a record month, with handle reaching $21.1 million.

Gross revenues increased 323 percent to $11.0 million for the quarter ended March 31, 2003 as compared to $2.6 million in the first quarter of 2002.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $522,000 for the first quarter of 2003, a $2 million improvement over the comparable quarter of 2002. That figure represents about a .02 EBITDA per share, the first time the company has been positive since its inception.

Although officials didn't want to comment on the future earnings of the stock, Youbet.com did have record handle earlier this month in conjunction with the Kentucky Derby and the company stated that May handle could surpass the record set in March.