Youbet spokesman Hud Englehart said Jan. 2 the advance deposit wagering company has been working with federal officials to see that “qualified” IRG customers are receiving funds from their accounts.
IRG, which is estimated to have less than 200 customers, in early October had $1.5 million in three bank accounts seized by the U.S. government as part of the investigation, which also included an Oct. 4 search by federal agents of Youbet’s California headquarters in Woodland Hills.
In the weeks after the search, which was self-reported by Youbet to the U.S. Securities and Exchange Commission, IRG customers were told they could not have funds released to them. But that scenario has changed somewhat in recent days.
“Youbet and the federal government are working together to make sure qualified customers are receiving their funds,” Englehart said without elaborating.
Englehart said he didn’t know the exact number of customers who have been paid, nor if any of the paid customers are from Nevada, which is where the federal investigation is believed to be primarily focused. Youbet has said in an SEC filing that its part in the investigation involves “various records, including, among other things, business records of our IRG business related to the wagering activities of certain customers.”
The Oregon Racing Commission on Oct. 19 notified IRG that it intended to suspend its license to operate a wagering hub, in part because the seized bank accounts left the wagering entity in non-compliance with state regulations.
IRG appealed the commission’s decision to the Oregon Office of Administrative Hearings, an action which allowed the company to remain in operation pending the outcome. Englehart said the hearing has yet to be scheduled, a status ORC executive director Randy Evers also believes is correct.
"I can’t say anything other than we are still proceeding with the contested case hearing, which means that we are still proceeding with the intent to suspend the license," Evers said in a voice-mail message to The Blood-Horse. "It’s in the attorneys hands."
Englehart said a new bank account was quickly set up following the ORC’s intent-to-suspend announcement, but added IRG didn’t want to immediately finance the account until it knew money could safely be distributed to customers.
“We couldn’t fund it, because we weren’t sure if the federal government was going to seize it again,” he said. “We are now doing it in conjunction with attorneys.”
Minutes of a Nov. 15 ORC meeting released in late December noted an IRG-affiliated attorney appeared before the commission to provide an update on the situation. According to the minutes, attorney Aaron Murphy told the commission IRG had secured a “segregated” bank account approved by the Federal Deposit Insurance Corp. (FDIC), and that “legal customers (those not implicated in the investigation) were now able to access their funds and are being paid their requested full amount.”
During the Oct. 19 meeting with ORC commissioners, a Youbet.com official estimated the liability at the time to IRG customers was in the neighborhood of $3 million. The Oregon hub has handled more than $519 million in IRG wagers from the fourth quarter of 2005 through the third quarter of 2007, according to ORC data. Using the top-end estimate of 200 IRG customers, the annual wagering average over the two-year period is nearly $1.3 million per bettor.