Youbet revenue rises for year

Youbet.com, the account-wagering company that has an agreement to merge with Churchill Downs Inc., had net income of $11.6 million in 2009 on revenue of $111.4 million, according to financial statements released by the company on Thursday afternoon.

The 2009 results were boosted by a $7.9 million income-tax benefit from credits derived by net operating losses Youbet continues to carry on its books, according to the financial statements. Revenue for the year was up 2.2 percent compared with 2008 revenue of $109 million, but down 9.1 percent compared with $122.5 million in 2007.

Last year, Youtbet had a net loss of $4.5 million, but that result was negatively affected by an $11.2 million non-cash writedown on the value of its assets.

According to the company, handle through its account-wagering platform for the year was $480.3 million, up 10 percent compared with handle in 2008. The growth in handle bucked industry-wide trends - in 2009, total handle from all-sources on Thoroughbred races in the United States declined 9.9 percent, according to figures from Equibase. Handle in the fourth quarter, however, was flat.

Late last year, Youbet reached an agreement to merge with Churchill Downs Inc. in a deal that valued Youbet at $126 million. If the deal is approved by regulators and Youbet's board, Churchill Downs would become the largest account-wagering operator in the country

The financial statements indicate that an effort led by Churchill Downs to increase the amount of money racetracks derive from account-wagering companies has resulted in higher track commissions. According to the statements, Youbet paid $50.7 million in 2009 as track fees for its content, compared with $39.3 million in 2008. But Youbet's licensing fees, which are paid to its competitor, TVG, fell in 2009 to $4.3 million from $9.1 million in 2008, because of the expiration of exclusive contracts that required Youbet to compensate TVG for access to the tracks' signals.

Youbet also owns one of the three dominant bet-processing companies in the United States, United Tote. Revenue for United Tote for the full year was down 11 percent compared with 2008, according to Youbet, to $21.7 percent. Youbet attributed the decline in revenue to wagering declines over the past year.