In contrast to most Internet gaming
and bookmaking sites, which establish their bases offshore
in order to avoid U.S. regulations, Internet gambling site,
Youtbet.com, is based in Woodland Hills, California and is
publicly traded online on the Nasdaq exchange.
Chuck Champion, CEO of Youbet.com, hopes to help legitimize
the online gambling industry by operating Youbet.com within
the parameters of U.S. gambling laws and policies. In order
to do that, Youbet uses the same model as legitimate off-track
betting businesses in the U.S. Thus, Youbet takes only horseracing
bets and these wagers are then wired into betting pools
at the track. Youbet makes its money by skimming off a small
percentage of the take. “We would like to be an agnostic,
independent company that provides services to the entire
industry”, said Champion. “We believe the industry needs
someone like us”.
Champion hopes that, by taking this approach to the online
gambling business, he will not only revive waning interest
in horseracing, but he’ll also slowly but surely bring a
legitimate face to online gambling.
With such lofty goals for Internet gambling industry then,
it seemed quite a contradiction when Youbet announced that
it planned to acquire the International Racing Group (IRG)
based in the Dutch Antilles.
The seeming contradiction comes as a result of the identification,
by U.S. federal prosecutors, of IRG as one of four betting
shops used by a group in New York that is supposedly connected
to the Gambino organized crime family. Allegedly, IRG, is
being used to run a multi-million dollar illegal gambling
operation.
Champion expressed confidence, however, in the eventual
vindication of IRG. It is still early enough for Youbet
to back out of the agreement too, since the acquisition
is contingent upon the approval of the Youbet.com review
board and its board of directors. Champion admits that he
knew about IRG’s initial indictment when Youbet issued its
intent to acquire IRG, but he is adamant about not being
aware of any ongoing investigation involving IRG. “If we
should find out that IRG is the target of a state or federal
prosecution, is that going to cause us to rethink our acquisition?
Of course,” commented Champion. Champion also pointed out
that before Youbet completes the acquisition, a due-dilligence
committee set up by Youbet to investigate IRG will first
deliver a report on IRG’s status. Six people are on the
committee and some of these people are former members of
the secret service and the Nevada Gaming Control Board.
The review should be finished by mid-June.
