International Racing Group, a subsidiary of Woodland Hills-based Youbet.com Inc., said Tuesday that federal and state authorities have agreed to settle an investigation into wagering activities of certain customers in Nevada.

Under the terms of an agreement, signed with the U.S. Attorney’s Office in Las Vegas, the government has agreed not to pursue any charges against the online wagering services provider or its subsidiaries. In exchange, Youbet.com has agreed to continue cooperating with the government in its investigation and has agreed not to contest the previously announced seizure of about $1.5 million from I.R.G. The money was seized in October, when the investigation was announced.

Youbet.com added that it expects to incur certain costs associated with its cooperation with the investigation, but gave no specific amounts.

Youbet.com decided to shutter the troubled betting unit in February because it had become unprofitable and showed no sign of turning around.

Closing 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. Youbet added that IRG had been hurt by a severe reduction in wagering.

“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 in February.

Shares in Youbet.com were up 3.8 percent to 83 cents in early trading Tuesday.