Youbet.com Reports Third Quarter Diluted Earnings Per Share of $0.05, Inclusive of $0.01 Impact for Compensation Charge; Third Quarter Income from Operations Rises 101% Year-Over-Year on 49% Increase in Total Revenue

Business Wire, Nov 3, 2005

WOODLAND HILLS, Calif. -- Youbet.com, Inc. (NASDAQ: UBET) today reported net income of $1.8 million, or $0.05 per diluted share, for the third quarter ended September 30, 2005, inclusive of a $0.2 million, or $0.01 per diluted share, impact from a previously-disclosed compensation charge. For the third quarter of 2004, Youbet reported net income of $4.0 million, or $0.12 per diluted share, inclusive of a non-cash income tax benefit of $3.3 million, or $0.09 per diluted share, as a result of the Company releasing a portion of its reserve against net deferred tax assets.

Summary of Third Quarter Results

                                    For the three months
                                     ended September 30,
                                      (in thousands,
                                     except per share
                                   and percentage figures)
------------------------------------------------------------ ---------
                                      2005             2004   % change
------------------------------------------------------------ ---------
 Total wagers (handle)             $151,303(1)      $83,714     80.7%
----------------------------------------------------------------------
Total revenue (commissions from
 handle plus other revenue)        $ 26,079         $17,543     48.7%
----------------------------------------------------------------------
Net revenue (revenues from
 commissions less track and
 licensing fees)                   $  8,076         $ 5,816     38.9%
----------------------------------------------------------------------
Yield (2)                               5.3%            6.9%
----------------------------------------------------------------------
EBITDA (3)                         $  2,151         $ 1,027    109.5%
----------------------------------------------------------------------
Net income                         $  1,848         $ 4,041(4)
----------------------------------------------------------------------
 Diluted EPS                       $   0.05         $  0.12(4)
----------------------------------------------------------------------

    (1) Of total handle, $108.1 million was attributable to Youbet and
        $43.2 million was attributable to International Racing Group
        ("IRG").

    (2) Yield is defined as net revenue (commission revenue less track
        and licensing fees, each as calculated in accordance with
        Generally Accepted Accounting Principles ("GAAP") and
        presented in the Consolidated Statements of Operations
        Information attached to this release) as a percentage of
        handle. The decline in yield for the three-month period ended
        September 30, 2005 compared to the prior year period is
        primarily due to a change in track mix and the acquisition of
        IRG, whose operations carry a lower overall yield. Youbet's
        management believes that yield provides useful data to
        evaluate the company's operating results and profitability.
        Yield should not be considered an alternative to operating
        income or net income as indicators of Youbet's financial
        performance, and may not be comparable to similarly titled
        measures used by other companies.

    (3) EBITDA is defined as earnings before interest, taxes,
        depreciation and amortization. A reconciliation of EBITDA to
        net income, the most comparable GAAP financial measure, can be
        found attached to this release.

    (4) Net income and Diluted EPS for the three-month period ended
        September 30, 2004 includes a non-cash income tax benefit of
        $3.3 million, or $0.09 per diluted share, as a result of the
        Company releasing a portion of its reserve against net
        deferred tax assets on its balance sheet.

Chairman, President and Chief Executive Officer, Charles F. Champion, commented on Youbet's results, "The fiscal 2005 third quarter represents another quarter of operating and financial gains and reflects growing consumer demand for our value-added Advanced Deposit Wagering (ADW) product and service offerings. Further, the quarterly results are indicative of the success of our targeted marketing programs as we continue to achieve strong rates of new customer sign-ups.

"The third quarter also benefited from the first full quarter of contributions from IRG, which generated $43.2 million of handle during the period. By adding this segment of pari-mutuel handle, we have meaningfully expanded our wagering channels. The licensing yesterday of IRG by the Oregon Racing Commission was an important event for both Youbet and those in the horse racing industry that have publicly expressed a concern about wagering compliance and transparency issues vis-a-vis off-shore pari-mutuel companies. We now have, for the very first time, a company in this segment that is subject to public company reporting requirements and the highest compliance standards of any off-track wagering company anywhere, and is also licensed by the same regulatory body as TVG and XpressBet. With this license we believe further expansion of track content and wagering pools accessible to IRG and its customers is possible.