Updated on 09/16/2011 8:54AM

Don't bet against Youbet


When Youbet.com was born, allowing horseplayers to watch races and wager by computer, its technology seemed to offer exciting and limitless possibilities. Optimists thought that this could be the medium that would bring racing into the homes of a mass audience.

But Youbet.com suffered a fate similar to many other high-tech ventures in the 1990's and didn't live up to expectations. The company has never made a profit, and on Tuesday its stock was selling for 57 cents a share. Yet in a crucial sense it's been a success. It's been a technological trailblazer, developing a product that's sophisticated, efficient, and enjoyable. For some users, it's almost hypnotic.

Like many horseplayers, I tried Youbet.com a few years ago and found it unsatisfactory. The video transmission of races was like a herky-jerky old-time movie. Placing a wager was a cumbersome procedure. Youbet didn't offer some of the nation's best tracks, including those in New York and Kentucky. And it was beset with technological glitches. I gave up on Youbet after being plagued by crashes and messages such as "You have experienced an unexplained database error," or "Please wait a minute while your program is compacted."

It seemed that Youbet would never be able to compete with the TVG Network or the Race Track Television Network, which bring the sport to home TV; or with various telephone-betting operations that are quick, convenient, and reliable.

But I revisited Youbet recently and found it transformed - particularly in audiovisual quality. In many ways it now has an edge over the TV networks.

"This is a very complex product and, with experience, we've refined it," said David Marshall, Youbet's co-founder and CEO. "We are now one of the largest broadcasters of live audio-video in the country. We're at the leading edge. What you see now is pretty good, and day by day we're getting better."

Marshall said many of Youbet's improvements are due to its availability on the Internet. Initially, subscribers had to install software with a CD-ROM disk, a procedure that created various technical problems. But since customers have been able to log onto www.youbet.com, Marshall said, "we're compatible with all the computers across the country."

Customers establish an account by making a deposit to fund their wagers, but they pay no monthly fee. After logging onto the website, they click onto the names of the tracks they want to see. On the left side of the screen will appear as many as eight "buttons" showing a racetrack's name and the number of the upcoming race. Clicking on the button brings up the entries for that race, in the format of a racetrack program; a list of scratches and late changes; a tote board with the current odds; a grid showing probable exacta payoffs; and the audio-video feed from the racetrack.

By clicking on another button, the user can get all of this information for another track in a matter of seconds. And by clicking "Wager Here" he can call up a betting menu.

In the past year Youbet has made a pair of crucial breakthroughs. It struck a deal with Gemstar-TV Guide, the parent company of the TVG Network, allowing it to show races and take wagers from tracks that once had exclusive deals with TVG (such as Saratoga and Del Mar). Now a Youbet customer can watch races from almost every important track in the country.

Youbet also made a technological breakthrough that simplifies funding an account. Customers of most phone betting services make deposits either by mailing a check or using a credit card, which can involves fees on both ends of the transaction as well as hassles with the credit-card issuer.

Youbet developed a system called ExpressCash, which lets bettors transfer money almost instantaneously from a checking account.

As Youbet has improved its service, people in the industry have been paying more attention to its sickly stock price and wondering if the company can survive. "People have been asking that since 1995, but it's not something that's a concern," Marshall said, adding that he expects to be breaking even toward the end of the year.

Youbet's progress has been slow, Marshall said, because it has taken time to develop the necessary technology as well as to change attitudes within the racing business.

"When we started," he said, "the industry wasn't ready for what we were providing. There was a lot of fear that racing fans wouldn't go to the track. But the industry has realized now that home wagering is the key."

As a result, Youbet has been able to forge strategic partnerships with other major players in the business, such as Gemstar-TV Guide and Churchill Downs.

But the home-betting business still hasn't yielded a financial windfall. High-end players can watch races on TV or on Youbet and wager with somebody else - such as an offshore bookmaker offering rebates.

Youbet's future remains uncertain, but racing fans who've observed the company's improvements and have been mesmerized by the action on its website will concur that it deserves to survive and to prosper.

(c) 2002, The Washington Post