Youbet posts $2M loss for 2006

Youbet.com, the diversified online horserace broadcasting and wagering company, had a net loss of $2 million for 2006, compared to net income of $5.7 million in 2005, according to financial statements released by the company on Tuesday.

Revenues for the company, driven by strong wagering gains for its domestic account-wagering platform and for its offshore rebate shop, International Racing Group, were $136.7 million, up 53.9 percent over 2005. Expenses rose 60.4 percent, from $85.8 million in 2005 to $137.3 million in 2006.

Total handle through both Youbet.com and IRG rose 61.5 percent to $763 million. Of that total, $299.2 million was bet through IRG, an increase of 190 percent over the 2005 figure. Youbet said in a release that the growth was driven in part by the implementation of computerized robotic wagering at IRG in 2006. The technology utilizes a sophisticated computer program to determine large combinations of wagers, coupled with rebates on handle.

In addition to its domestic account-wagering service and IRG, Youbet also owns United Tote, a bet-processing company. Youbet recorded $21.8 million in contract revenues from United Tote, which it purchased early in 2006, and another $1.3 million in equipment sales.

Over the past month, Youbet's stock has lost approximately 20 percent of its value, in part because of an announcement from Churchill Downs Inc. and Magna Entertainment Corp., which supply racing signals to Youbet, to launch a competitor to the service later this year. Youbet's shares opened at $2.84 on Tuesday morning.

In the earnings announcement on Tuesday, Youbet said that its board has approved the use of up to $10 million in cash to buy back shares over a period of 24 months.

"The authorization was granted by the board, recognizing that our shares are selling at a price we believe does not reflect the long-term value of the company and highlighting the board's confidence in our strategic growth and diversification plans," said Charles Champion, Youbet's chief executive, in a release.