Youbet.com Wins With Churchill Downs
Technology
by Christopher Keough
Internet wagering company Youbet.com Inc. has formed an alliance with Kentucky Derby host Churchill Downs Inc., making Youbet.com the official online wagering site for the Run for the Roses.
Youbet.com and CDI agreed to a one-year marketing relationship in which Woodland Hills-based Youbet.com will target Churchill Downs fans in six direct-mail campaigns. Churchill Downs also will place links to Youbet.com’s Web site on its own sites, which include Hollywood Park.
Youbet.com also gets 30-second commercial spots on the 1,000-affiliate Churchill Downs Simulcast Network and print advertising on race programs at CDI tracks.
David Marshall, Youbet.com chairman and chief executive, declined to disclose terms of the deal, but said he paid a “small fee” for the arrangement. Beyond that, CDI stands to gain from any increased traffic at Youbet.com.
“For every person that comes on our system, there’s a pretty good chance they’re going to place a wager at one of their tracks,” Marshall said.
The deal is not exclusive, but Marshall said he doesn’t expect CDI to make similar arrangements with anyone else. Both CDI and Youbet.com make money by collecting a percentage of money wagered, Marshall said. Youbet.com averages just more than 5 percent of each bet.
Youbet.com started in 1987 and went public in 1995, raising $5 million. Since then, the company has raised another $100 million from a secondary offering, a preferred stock offer and private investment.
The company is not profitable, but Marshall said he expects to be by the end of the year. Youbet.com’s stock, which trades on Nasdaq, closed at 82 cents the day the CDI deal was announced, up 8 percent.
The company also announced a similar two-year deal with Maryland Jockey Club, which runs Laurel Park and Pimlico Race Course.
Software Funding
Digital Evolution Inc. has closed a $15 million funding round led by Paladin Capital Partners Fund LP.
The Santa Monica-based software company, which develops applications that manage communication among disparate computing systems, will use the money to hire sales and marketing staff, as well as to acquire companies. Eric Pulier, chairman and chief executive of Digital Evolution, said he expects to expand his staff from fewer than 50 employees today to 80 employees by the end of the year.
Pulier said the company recently opened a Washington office and is pushing to sell its products to the federal and state government. The relationship with D.C.-based Paladin will come in handy in that pursuit, Pulier said.
“There is nowhere the problems are more prevalent than in the government,” Pulier said. “There’s also nowhere efficiency can be more fully realized if information is delivered to the right place at the right time.”
Outside government, Digital Evolution’s customers include Farmers Insurance Group, 24 Hour Fitness Worldwide Inc., United States Steel Corp. and Duke University Medical Center. The company sells software for an average of $100,000, plus maintenance and support services.
The money is the company’s first round of investment, Pulier said. He believes it will also be the last. Paladin officials didn’t return calls for comment.
Pulier started the company in 1994, but it merged with Cupertino, Calif.,-based US Interactive Inc. in 1998, and Pulier re-established Digital Evolution independent of US Interactive that same year, with between $5 million and $6 million of personal investments.
New R & D; Digs
Tanner Research Inc. will open a $2 million MEMS Prototyping, Research and Development Facility in its native Pasadena, a venture the company expects will generate revenues of up to $6 million a year.
The 1,000-square-foot facility at 2645 Nina St. opens officially on May 3 and will take the company, founded in 1988 by CalTech scientist John Tanner, in a new direction. The space and tools inside allow for the making of micro-electro-mechanical-systems (MEMS) computer chips with movable parts. To date Tanner has produced software, circuits and chips to help others create MEMS and performed research on the subject.
Amish Desai, MEMS product development manager, said Tanner scientists would design and produce MEMS for use by the U.S. military and commercial customers. Tanner will focus on low temperature materials and polymers that are cheaper and easier to work with than the standard high-temperature silicone nitrate and glass typically used in MEMS development.
Desai said the company had revenues of $11 million in 2001.
Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235, or at
[email protected].
