Colonial Downs sues Youbet.com

Colonial Downs in Virginia and the state's horsemen's group have filed a lawsuit against Youbet.com seeking an injunction that would prevent the online betting company from taking wagers from residents of the state.

The lawsuit, which was filed in federal court in Richmond, Va., alleges that Youbet.com had taken bets from Virginia residents without a license from the Virginia Racing Commission, a requirement under the state's racing law, or a source-market fee agreement with Colonial and its horsemen. The lawsuit claims that Youbet has taken approximately $10 million in bets in the state annually for the last three years.

A spokesman for Youbet.com said the company would decline to comment because officials had not yet had time to review the lawsuit thoroughly.

The lawsuit describes negotiations between Colonial Downs and Youbet.com over the past several years. According to the suit, Colonial had asked Youbet to pay 11 percent of all bets in the state to the track and its horsemen as a source-market fee. Youbet had offered to pay 3 percent in source-market fees.

Source-market fees are payments made by account-wagering companies to racetracks and horsemen from bets taken from customers located within a specific radius of a racetrack. Although many source-market fees are based on a 25-mile or 50-mile radius, Colonial contended that bets made by any Virginia resident should be subject to a source-market fee.

The lawsuit is seeking back payments based on Youbet's handle.