Youbet.com has been licensed by the California Horse Racing Board to offer account-wagering services to residents of California, effective immediately. Meanwhile, through Feb. 18, account-wagering handle through two other systems topped $5 million in the Golden State.
With the approval, Youbet.com joins the TV Games Network and Magna Entertainment as licensees in California. The CHRB was told Feb. 19 that Youbet.com had posted the required $500,000 bond.
"Horse racing fans in the California market represent the largest single subset of our industry," said Ron Luniewski, co-chief executive officer at Youbet.com. "Therefore, the market in this state for our online pari-mutuel wagering system brings substantial network expansion and revenue growth potential for our company."
Youbet.com's existing California membership totals more than 3,500 limited network customers. "Limited" status limits membership to retrieval of information and content only. Effective Feb. 21, California residents could simply activate a wagering account through Youbet.com by depositing funds.
Youbet.com (Nasdaq:UBET) maintains a strategic relationship with TVG, a wholly owned subsidiary of Gemstar-TV Guide International.
Investors reacted favorably to the news. A buying spree on Friday caused Youbet.com's stock to rise from 70 cents per share as high as 87 cents per share. By 2 p.m., the price had settled around 79 cents or a 13% increase from the day's opening price. Trading was extremely heavy with 532,900 shares changing hands compared with the company's 100-day average volume of 86,045 shares.
From Jan. 25 through Feb. 18, XpressBet, operated by Magna, handled almost $3 million, most of it on Thoroughbred racing. TVG handled more than $2 million. Currently, live racing in California is controlled by Magna, which owns Golden Gate Fields and Santa Anita Park; TVG cannot offer wagering on those tracks.
TVG still is without a contract with the Thoroughbred Owners of California for the Hollywood Park meet that begins April 24. It must have a contract with the TOC before wagering can be offered on Hollywood Park, one of TVG's exclusive partners.
Magna Entertainment vice president Ed Hannah told the CHRB that start-up problems with XpressBet have been tied to a large number--5,115--of new accounts. Hannah said the system has been overwhelmed thus far, though improvements have been made. The goal is to process all new applications in 15 minutes or less, and new hardware and software now allow XpressBet to handle six times its original capacity, Hannah said.
CHRB chairman Alan Landsburg urged account-wagering providers to find ways to use California labor. He asked TVG, whose wagering hub is in Oregon, to address the possibility of setting up a California wagering hub. The matter is expected to be addressed at the board's March 28 meeting.