Youbet may buy sports-bet firm

Youbet.com, the online horse race wagering company, has made an offer to buy a bankrupt sports and race book operator in Las Vegas for $9.5 million in a bid to enter online sports wagering, company officials said Wednesday.

The target of the bid, American Wagering Inc., operates 49 sports and race books at small casinos and other properties throughout Nevada under the name Leroy's Horse and Sports Place, with plans to expand to 60 by Dec. 1. The company has been operating under Chapter 11 bankruptcy proceedings with total assets of $9.6 million and total liabilities of $7.8 million.

Vic Gallo, the general manager of Youbet Nevada, a new subsidiary of Youbet that would manage American Wagering if the bid succeeds, said that Youbet has been interested in offering internet wagering on sports and horse races in Nevada since state regulators introduced rules last summer that would potentially allow for fixed-odds wagering over the telephone and Internet, with the capability of taking bets from international customers.

Those rules have not been formally approved, Gallo said, but AWI's locations, combined with Youbet's bet-processing hub in Oregon, could form the backbone of an Internet fixed-odds business.

"We think it's an obvious marriage," Gallo said. "We think it's an incredibly good fit for Youbet."

Youbet's offer for the company included about half of the purchase price in cash and the other half in Youbet stock. Gallo said that Youbet had been negotiating with AWI's management for several months to purchase a part of the company, but that management had turned the offers down, requiring Youbet to file a petition with the court overseeing AWI's bankruptcy.

The court has scheduled a hearing on Nov. 12 to consider Youbet's offer, and if the offer is approved by the court, it will be considered along with competing bids at a hearing scheduled for Feb. 14, 2005. The proposal would be subject to a number of approvals from Nevada regulators and American Wagering's shareholders and creditors.

American Wagering also owns and operates several subsidiaries that provide bet-processing equipment and computer systems to Nevada casinos, according to company documents.