The wagering company only noted IRG as a previously-designated discontinued operation in its financials for the first quarter, and the former off-shore rebate shop, which Youbet has said is part of a federal investigation into some of its operations, wasn’t mentioned during the 30-minute conference call with analysts.
New chief executive officer Michael Brodsky, who replaced interim CEO Gary Sproule April 24, said he had centered his short tenure at Youbet on returning the company to its core products.
“Our focus has returned to our two core businesses, Youbet Express and United Tote … much of improvement is a focus on cost containment,” he said. “Overall, our restructuring plan is beginning to pay dividends.”
Brodsky said Youbet was still exploring options for United Tote, which was mentioned in the company’s fourth quarter as possibly being put up for sale.
Youbet, which posted a fourth-quarter 2007 loss of $27.4 million, including $24.1 million in one-time impairment write-offs, reported a net income from continuing operations of $1.18 million, a 45.7% increase over the same period a year ago. Losses from discontinued operations, which include IRG and Youbet’s former Bruen Productions unit, totaled about $409,000.
Wagers handled on the company’s Youbet Express platform were $95.47 million in the first quarter, a decline of 16.4% from the $114.19 million a year ago. The company attributed the drop to the loss of track content now controlled by TrackNet Media Group, as well as a new ban of customers in Arizona, Kansas, and Washington, D.C.
But Youbet reported its yield from wagers rose to 8.4% from 8.1% last year. Company chief financial officer Jim Burk said the increase was due to the replacement of “lower yielding” tracks owned by Magna Entertainment Corp. and Churchill Downs Inc., the partners in TrackNet, with higher-yielding independent tracks.
The company also reported a 3.7% increase of $3.4 million in same-track handle, and $1.7 million in handle from new content.
“While we are please to see some traction, there is still work to be done,” Brodsky said.
One analyst asked company executives about what role Youbet could play in the ongoing dispute between horsemen affiliated with the Thoroughbred Horsemen’s Group and CDI.
Burk said the company was in favor of the widest possible distribution of track signals on ADWs, which the THG supports, but also believes ADWs are entitled to a fair share of revenues.
“What we want is what TrackNet wants, and what THG wants,” he said. “At the end of the day…any standoff in the industry as in regards to content is bad for us, and bad for our customers.”