Youbet.com, an online horse racing and wagering site that has burned through more than $64 million since 1998, expects to begin turning a profit in 2002. The company's new relationship with the TV Games Network will make it happen, according to Robert Fell, Youbet.com's chairman and chief executive officer.
On May 21, Youbet.com and TVG announced they had formed a strategic partnership that gives TVG a 19.9% stake in the online company with the potential for the network to own up to 51%. In return, Youbet.com gains access to 26 racetracks holding exclusivity contracts with TVG and controlling 45% of the United State's Thoroughbred pari-mutuel handle.
The access to TVG racetracks means Youbet.com customers will soon be able to wager on 81 tracks in 39 states. Youbet.com needs to establish a new wagering hub in Oregon before it can begin taking bets from the TVG racetracks. The company has already received its hub license from the Oregon Racing and Wagering Commission and expects to have the hub up and running by September.
"Now that our network is complete with virtually 100% of the market, including content and access to domestic horse racing handle, we are aggressively pursuing substantial growth opportunity, both operationally and financially," Fell said.
Fell expects the number of Youbet.com subscribers to grow from 17,000 to more than 20,000 by the end of the year.
The company's projection of profitability gave the stock (Nasdaq:UBET) a big boost Thursday morning. Youbet.com opened at $1.06 and reached as high as $1.34 in early morning trading. The stock settled back down to $1.20 by 11 a.m. with the volume heavy at 863,300 share changing hands, compared to the stock's average daily volume of 138,000.
Youbet.com reported a loss of 12 cents per share for the first quarter of the year. The loss was an improvement from a 17 cents per share loss reported for the same quarter of 2000.