Youbet posts slim profit

Youbet.com, the online horse race broadcasting and wagering company, had net income of $67,000 in the third quarter of 2007 on revenue of $30.5 million, according to financial documents Youbet released Wednesday.

The third-quarter profit compares with a loss of $440,000 in the third quarter last year on revenue of $29.6 million. The results include revenue and expenses from Youbet.com's U.S.-based account-wagering operation, its offshore rebate shop, International Racing Group, and its bet-processing company, United Tote.

According to the statements, the U.S. account-wagering operation had $133 million in handle in the quarter, up 12.6 percent over handle of $118.4 million in the third quarter of last year. Handle at IRG, however, declined 26 percent, from $98.4 million last year to $72.5 million.

Youbet officials said during a conference call with analysts Wednesday that IRG's handle declined because of the loss of signals from tracks owned by Magna Entertainment Corp. and Churchill Downs Inc. During the second quarter, Youbet and IRG lost the right to offer wagering on the tracks because of a lack of agreement with a simulcast marketing partnership owned by Churchill and Magna.

Early in October, Youbet acknowledged that investigators from U.S. Immigration and Customs Enforcement and searched the company's California headquarters and seized records related to wagering by some IRG customers. The investigators also seized $1.5 million in bank accounts maintained by Youbet for the IRG customers.

Since then, IRG customers have been unable to withdraw funds from their accounts. The actions took place after the third quarter ended.

Chuck Champion, the chief executive of Youbet, said on the conference call that the company is working on resolving the account issues.

"It is our intention to make sure that the accounts of all our legitimate [IRG] customers are funded," Champion said.