A founder of Youbet.com who recently rejoined the pari-mutuel wagering network says the company's new management team is focusing on marketing, cooperative efforts with racetracks, and raising capital.
"There is a new team at Youbet. Be careful about judging us based on our previous regime," David Marshall, co-founder of Youbet.com who became the company's chief executive officer earlier this month, told financial analysts Wednesday during a conference call in conjunction with release of Youbet.com's fourth quarter and annual results for 2001. Marshall left Youbet.com in 1999 and recently returned after a massive turnover in management. The Youbet.com board of directors has also been shuffled.
Youbet.com reported revenue for the fourth quarter of 2001 totaled $1.8 million, a 31% increase compared to revenue of $1.4 million for the fourth quarter of 2000. Wagering handle from Youbet's customer base was $19.8 million for the fourth quarter of 2001, compared to handle of $21.4 million during the same quarter last year. Revenue for the year ended Dec. 31, 2001 was $6.3 million, an increase of 6% from revenue of $6.0 million for fiscal 2000. Handle generated in 2001 was $94.6 million as compared to handle of $97.0 million recorded in 2000.
Youbet.com said the revenue increase in the fourth quarter was partially attributable to an accounting change. Once the Oregon wagering hub began operations, Youbet.com began counting all takeout--ranging from 15%-20% per wagering dollar--as revenue. The commissions paid out to tracks and other entities was tallied as expenses. Previously, when Youbet.com's wagers were only processed through a Pennsylvania hub, the company's revenue was derived only from its commissions on each wager.
For the year, Youbet.com reported a net loss of $14.8 million, or $0.76 per common share, a reduction of 12% from a loss before extraordinary item of $16.7 million, or $0.86 per common share, for 2000.
``Momentum from activity through our Oregon-based wagering hub and some degree of stabilization in wagering activity from the lows experienced in September industry-wide contributed to our fourth quarter revenue growth," Marshall said. "Now that we are servicing online and telephone horse racing pari-mutuel account wagering in California as of last month, our handle generation is showing positive progress as we welcome new and previously non-active members to active Youbet network status.''
Marshall said he could not provide any numbers on the amount of wagering through Youbet.com from the implementation of account wagering in California, but would have numbers presented to the California Horse Racing Board on Thursday.
Marshall said Youbet.com has succeeded in developing the best system for processing electronic wagers and in its audio and video presentations. But he said the company needs to move forward by getting more business.
"Clearly securing new financing is one of my priorities," Marshall said. "Another is to strengthen Youbet's management to augment the resources we have now. My other initial order of business is to look at ways that the company can further develop its marketing relationships with the leading racetracks in this industry., Marketing is clearly one of our key focuses and the way to approach our market I strongly believe is in partnership with the racing community that currently exists. We know who our customers are and where they are and now we need to reach them."
Marshall said Youbet.com was strengthening its working relationship with the TVG Network and also envisions a closer relationship with Magna Entertainment. Ron Luniewski, the co-chief executive officer of Youbet.com, resigned recently to run Magna Entertainment's new XpressBet interactive wagering business.
"I think Ron going over there is a very positive thing for that company," Marshall said. "We can be friendly competitors working together as an industry against the competition we really have which is from other forms of entertainment, sports, and off-shore betting operations. I think we are going to have very strong relationship and Magna has shown they are a good supporter of our company."
Youbet.com's net loss for the fourth quarter of 2001 includes a write-off of the company's sports platform in the amount of $2.5 million.
Company executives said there is a possibility the sports- wagering concept could be revived.