New Jersey Action Adds to Youbet's Woes
Updated: Saturday, December 2, 2000 6:53 PM
By Linda Dougherty and Eric Mitchell
Posted: Friday, December 1, 2000 9:18 AM
Youbet.com, the interactive pari-mutuel wagering network that has seen its stock price plummet this week amid a restructuring, has been dealt a setback by regulators in New Jersey.
In a letter dated Nov. 14, the New Jersey Racing Commission has directed Ladbroke, Youbet's wagering hub, "to immediately cease and desist accepting any Internet wager that originates in New Jersey." While Ladbroke appealed the NJRC's order, the ban took effect Wednesday.
Frank Zanzuccki, executive director of the NJRC, said that it is against the law for any New Jersey resident to place wagers via the Internet or by phone with out-of-state corporations.
"According to state law, the only places that New Jersey residents can make pari-mutuel wagers are at the five New Jersey racetracks and at Atlantic City casinos and their racebooks," said Zanzuccki. He said that while it is extremely difficult to prevent residents from opening phone-bet accounts or wagering through the Internet, the NJRC can hold companies that open such accounts responsible.
Another online wagering entity, Winticket.com, based at Beulah Park near Columbus, Ohio, also was told it can't offer wagering on New Jersey tracks. It is permitted to offer betting by phone through Ohio TAB.
Since Youbet.com announced earlier this week a restructuring and cost-cutting initiative, the publicly traded stock has fallen to 52-week lows and closed Thursday at 69 cents per share after trading as low as 44 cents per share on a day of heavy trading. Trading was still heavy Thursday at 406,300 shares. The stock's 100-day average trading volume is 68,930 shares, according to Bloomberg.
The restructuring and announcements that the company president had resigned and jobs were being cut sparked the sell-off. Youbet.com is cutting 34 jobs, or 29% of its workforce, and it accepted the resignation of A.L. Frank, president and chief operating officer since February. The price dropped 13% by the end of trading Tuesday and another 28% when the market closed Wednesday. Youbet.com's stock has been as high as $7.38 during the past year.
Trading was still heavy Thursday at 406,300 shares. The stock's 100-day average trading volume is 68,930 shares, according to Bloomberg.
Youbet.com reported a $3.9 million loss during the third quarter ending Sept. 30 and a $3.4 million loss, or a loss of 55 cents per share, for the first nine months of the year. The company is carrying an accumulated deficit of $65.7 million.
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