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Youbet.com Inc.

Year Founded: 1995

Core Business: Offering subscribers full-service betting on horse racing over the Internet

Revenues in 1998: $250,000

Revenues in 1999 (projected): $7 million

Employees in 1998: 30

Employees in 1999: 77

Goal: To offer online betting on horse racing 24 hours a day around the world

Driving Force: Growing popularity of gaming over the Internet

By JASON BOOTH

Staff Reporter

Want to place a bet on a horse race at four in the morning? All you need to do is log onto Youbet.com, the West Los Angeles firm that brings online gambling right into your living room.

"We believe we can expose horse racing to a whole new generation," said Ron Luniewski, chief operating officer of the 4-year-old company, which began full-fledged Internet operations earlier this year.

In promotional material sent to race tracks, Youbet describes potential subscribers as "millions of martini-drinking, cigar-smoking yuppies; stir-crazy cyber-surfers; action-driven sports fans; and suburban families that just can't find a baby sitter."

Among those specifically targeted are day traders and video-game players.

At this point, Youbet is the only online horse-racing and wagering network in the United States. Many other online services typically located overseas have run afoul of U.S. regulations because they offer games that are illegal outside casinos.

By focusing on horse racing and working with established race tracks, Youbet has been able to work within existing laws.

Currently 42 states allow betting on horses, while only one state (Nevada) allows betting on other sports. The Interstate Wire Act of 1961 prohibits the use of phone lines for transmitting of gambling information, but makes an exception for horse racing. And legislation recently passed by the U.S. Senate Judiciary Committee makes Internet casino and sports gambling illegal, but provides an exception for wagering on legal horses races, as long as it is done on a closed-loop, subscriber-based system such as the one Youbet uses.

"Youbet has taken a different approach," said Mark Hardie, an analyst at Forrester Research Inc. in Cambridge, Mass. "When you sign up, you are joining a private network that runs in conjunction with established, legitimate gaming establishments. I don't think they will run up against the same kind of regulatory hurdles that other online betting services face."

To provide the service, Youbet collects about 4.5 percent of the total amount of money wagered by its subscribers, along with a monthly subscription fee of $5.95.

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