Shares in Youbet.com Inc. plunged nearly 9 percent early Thursday after the company said it is closing down its troubled offshore telephone wagering entity International Racing Group by Feb. 15.

The Woodland Hills-based provider of horse-race wagering services said the IRG business had become unprofitable and showed no sign of turning around. Shuttering the business will cost Youbet $9.9 million, which will be reflected in its fourth quarter earnings, the company said. Youbet acquired IRG in June 2005.

“The decision to close IRG was necessary as we continue to focus our management priorities on improving profitability and shareholder value,” interim Chief Executive Gary Sproule said.

Youbet added that IRG had been adversely impacted due to a severe reduction in wagering activity. The business was also involved in an investigation by the U.S. Attorney’s Office in Las Vegas which is still ongoing.

In October, the IRG division had $1.5 million seized by federal agents in relation to an investigation that Youbet says partly involves its subsidiary’s employees and customers. The investigation, when resolved, could impact the company’s finances further if charges are levied or damages become due, the company said. No other specifics about the investigation were made available.

Shares in Youbet dropped 8.7 percent to $0.94 in early trading Thursday on the Nasdaq.