##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
20549
 FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 2007
 Commission File Number: 0-26015
 YOUBET.COM, INC.
  Delaware
    
    95-4627253(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 5901 De Soto Avenue
Woodland Hills, California 91367
 (818) 668-2100
  þ o
  o þ o
  o þ




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##### 



YOUBET.COM, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED
SEPTEMBER 30, 2007
 PagePART I. FINANCIAL INFORMATIONItem 1. Condensed consolidated financial statements:Balance sheets as of September 30, 2007 (unaudited) and December 31, 2006
    
    
    2Statements of operations for the three and nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    3Statements of cash flows for the nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    4Notes to unaudited condensed consolidated financial statements
    
    
    5Item 2. Managements discussion and analysis of financial condition and results of operations
    
    
    12Item 3. Quantitative and qualitative disclosures about market risk
    
    
    20Item 4. Controls and procedures
    
    
    20PART II. OTHER INFORMATIONItem 1. Legal proceedings
    
    
    21Item 1A. Risk factors
    
    
    22Item 2. Unregistered sales of equity securities and use of proceeds
    
    
    23Item 3. Defaults upon senior securities
    
    
    23Item 4. Submission of matters to a vote of security holders
    
    
    23Item 5. Other information
    
    
    23Item 6. Exhibits
    
    
    24Exhibit 10.6Exhibit 31.1Exhibit 31.2Exhibit 32.1
  Preliminary Note
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Part I. Financial Information
 
 Item 1. Condensed consolidated financial statements
 YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    11,146
    
    
    $
    21,051Current portion of restricted cash
    
    
    5,308
    
    
    
    4,862Accounts receivable, net
    
    
    12,525
    
    
    
    13,287Inventory
    
    
    2,260
    
    
    
    2,587Current portion of deferred tax asset
    
    
    2,490
    
    
    
    2,367Prepaid expenses and other current assets
    
    
    1,908
    
    
    
    1,07235,637
    
    
    
    45,226Property and equipment, net
    
    
    27,043
    
    
    
    30,110Intangible assets other than goodwill, net
    
    
    14,242
    
    
    
    13,369Goodwill
    
    
    14,859
    
    
    
    15,243Other assets
    
    
    1,340
    
    
    
    1,657$
    93,121
    
    
    $
    105,605LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesTrade payables
    
    $
    11,731
    
    
    $
    13,759Current portion of long-term debt
    
    
    6,948
    
    
    
    8,311Accrued expenses
    
    
    6,533
    
    
    
    9,489Customer deposits
    
    
    8,790
    
    
    
    8,441Deferred revenues
    
    
    368
    
    
    
    20734,370
    
    
    
    40,207Long-term debt, net of current portion
    
    
    9,202
    
    
    
    12,054Deferred tax liability
    
    
    
    
    
    
    57043,572
    
    
    
    52,831Stockholders equityPreferred stock, $0.001 par value, 1,000,000 shares
authorized, none issued
    
    
    
    
    
    
    Common stock, $0.001 par value, 100,000,000 shares
authorized, 42,562,805 and 42,118,446 shares issued
    
    
    42
    
    
    
    42Additional paid-in capital
    
    
    134,048
    
    
    
    137,597Deficit
    
    
    (82,260
    )
    
    
    (83,555
    )Accumulated other comprehensive income (loss)
    
    
    21
    
    
    
    (10
    )Treasury stock, 1,029,828 and 443,062 common shares at cost
    
    
    (2,302
    )
    
    
    (1,300
    )49,549
    
    
    
    52,774$
    93,121
    
    
    $
    105,605
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006RevenuesCommissions
    
    $
    30,501
    
    
    $
    29,628
    
    
    $
    88,712
    
    
    $
    84,441Contract revenues
    
    
    6,379
    
    
    
    6,374
    
    
    
    18,038
    
    
    
    16,089Equipment sales
    
    
    287
    
    
    
    137
    
    
    
    801
    
    
    
    1,088Other
    
    
    961
    
    
    
    911
    
    
    
    2,848
    
    
    
    2,77838,128
    
    
    
    37,050
    
    
    
    110,399
    
    
    
    104,396Cost of revenuesTrack fees
    
    
    13,138
    
    
    
    14,171
    
    
    
    41,427
    
    
    
    40,531Licensing fees
    
    
    6,991
    
    
    
    6,043
    
    
    
    15,431
    
    
    
    15,323Network operations
    
    
    1,154
    
    
    
    1,335
    
    
    
    3,838
    
    
    
    4,135Contract costs
    
    
    4,352
    
    
    
    4,150
    
    
    
    12,595
    
    
    
    9,942Cost of equipment sales
    
    
    189
    
    
    
    57
    
    
    
    398
    
    
    
    59025,824
    
    
    
    25,756
    
    
    
    73,689
    
    
    
    70,521Gross profit
    
    
    12,304
    
    
    
    11,294
    
    
    
    36,710
    
    
    
    33,875Operating expensesGeneral and administrative
    
    
    5,114
    
    
    
    6,192
    
    
    
    15,459
    
    
    
    16,184Sales and marketing
    
    
    2,311
    
    
    
    2,399
    
    
    
    8,623
    
    
    
    6,952Research and development
    
    
    1,024
    
    
    
    813
    
    
    
    2,870
    
    
    
    2,488Depreciation and amortization
    
    
    3,198
    
    
    
    2,204
    
    
    
    7,506
    
    
    
    5,074Goodwill impairment writedown
    
    
    384
    
    
    
    
    
    
    
    384
    
    
    
    12,031
    
    
    
    11,608
    
    
    
    34,842
    
    
    
    30,698Income (loss) from operations
    
    
    273
    
    
    
    (314
    )
    
    
    1,868
    
    
    
    3,177Interest income
    
    
    168
    
    
    
    137
    
    
    
    553
    
    
    
    423Interest expense
    
    
    (460
    )
    
    
    (551
    )
    
    
    (1,478
    )
    
    
    (1,272
    )Other income
    
    
    27
    
    
    
    161
    
    
    
    45
    
    
    
    756Income (loss) before income tax benefit
    
    
    8
    
    
    
    (567
    )
    
    
    988
    
    
    
    3,084Income tax benefit
    
    
    (59
    )
    
    
    (127
    )
    
    
    (307
    )
    
    
    (21
    )Net income (loss)
    
    $
    67
    
    
    $
    (440
    )
    
    $
    1,295
    
    
    $
    3,105Earnings (loss) per share  basic
    
    $
    0.00
    
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.09Earnings (loss) per share  diluted
    
    $
    0.00
    
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.08
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Nine Months EndedSeptember 30,2007
    
    
    2006Operating activitiesNet income
    
    $
    1,295
    
    
    $
    3,105Adjustments to reconcile net income to
net cash provided by operating activities:Depreciation and amortization of property
    
    
    6,007
    
    
    
    3,842Amortization of intangibles
    
    
    1,499
    
    
    
    1,232Impairment writedown of goodwill
    
    
    384
    
    
    
    Stock-based compensation
    
    
    660
    
    
    
    525Bad debt
    
    
    1,105
    
    
    
    Net increase in operating (assets) liabilities
    
    
    (5,801
    )
    
    
    785Net cash provided by operating activities
    
    
    5,149
    
    
    
    9,489Investing activitiesCash paid in connection with acquisition of United Tote Company,
net of $160 in cash acquired in 2006
    
    
    (4,473
    )
    
    
    (10,094
    )Purchases of property and equipment
    
    
    (2,474
    )
    
    
    (4,099
    )Cash paid for IRG acquisition earn-out
    
    
    (3,106
    )
    
    
    (1,900
    )Decrease in restricted cash
    
    
    259
    
    
    
    1,013Increase in restricted cash
    
    
    
    
    
    
    (250
    )Other
    
    
    
    
    
    
    845Net cash used in investing activities
    
    
    (9,794
    )
    
    
    (14,485
    )Financing activitiesProceeds from long-term debt
    
    
    2,894
    
    
    
    Repayment of long-term debt
    
    
    (8,512
    )
    
    
    (3,568
    )Proceeds from sale-leaseback transaction
    
    
    1,065
    
    
    
    Repurchase of common stock
    
    
    (1,002
    )
    
    
    Proceeds from exercise of stock options
    
    
    352
    
    
    
    267Other
    
    
    (88
    )
    
    
    Net cash used in financing activities
    
    
    (5,291
    )
    
    
    (3,301
    )Foreign currency translation adjustment
    
    
    31
    
    
    
    (26
    )Decrease in cash and cash equivalents
    
    
    (9,905
    )
    
    
    (8,323
    )Cash and cash equivalents, beginning of period
    
    
    21,051
    
    
    
    16,686Cash and cash equivalents, end of period
    
    $
    11,146
    
    
    $
    8,363
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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YOUBET.COM, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2007
 Note 1: Basis of Presentation
    Note 2: Earnings (Loss) Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income (loss)
    
    $
    67
    
    
    $
    (440
    )
    
    $
    1,295
    
    
    $
    3,105Denominator:Basic weighted average shares outstanding
    
    
    41,898
    
    
    
    35,450
    
    
    
    41,883
    
    
    
    35,018Effect of dilutive stock options
    
    
    631
    
    
    
    
    
    
    
    923
    
    
    
    3,371Diluted weighted average shares outstanding
    
    
    42,529
    
    
    
    35,450
    
    
    
    42,806
    
    
    
    38,389Earnings (loss) per share  basic
    
    $
    0.00
    
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.09Earnings (loss) per share  diluted
    
    $
    0.00
    
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    0.08
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Note 3: Detail of Selected Balance Sheet Accounts:
 September 30,
    
    
    December 31,2007
    
    
    2006(unaudited)(in thousands)Accounts receivable, net:Track receivables
    
    $
    13,252
    
    
    $
    12,512Player receivables
    
    
    896
    
    
    
    1,249Other receivables
    
    
    389
    
    
    
    1,33914,537
    
    
    
    15,100Less allowance for doubtful accounts
    
    
    (2,012
    )
    
    
    (1,813
    )$
    12,525
    
    
    $
    13,287Inventory:Totalizator components
    
    $
    1,341
    
    
    $
    1,091Work-in-process
    
    
    210
    
    
    
    130Ticket stock
    
    
    583
    
    
    
    493Finished goods
    
    
    126
    
    
    
    873$
    2,260
    
    
    $
    2,587Property and equipment, net:Pari-mutuel equipment
    
    $
    22,868
    
    
    $
    21,668Computer equipment
    
    
    15,020
    
    
    
    14,138Software
    
    
    4,895
    
    
    
    4,386Leasehold improvements
    
    
    3,221
    
    
    
    3,130Office furniture, fixtures and equipment
    
    
    667
    
    
    
    57646,671
    
    
    
    43,898Less accumulated depreciation and amortization
    
    
    (19,628
    )
    
    
    (13,788
    )$
    27,043
    
    
    $
    30,110Intangible assets other than goodwill, net:Non-compete agreements
    
    $
    4,822
    
    
    $
    3,636Customer lists
    
    
    4,822
    
    
    
    3,636Technology rights
    
    
    3,805
    
    
    
    3,805Trademarks
    
    
    3,400
    
    
    
    3,400Other intangibles
    
    
    721
    
    
    
    72117,570
    
    
    
    15,198Less accumulated amortization
    
    
    (3,328
    )
    
    
    (1,829
    )$
    14,242
    
    
    $
    13,369
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Note 4: Debt
  September 30,
    
    
    December 31,2007
    
    
    2006(unaudited, in thousands)Promissory notes
    
    $
    3,200
    
    
    $
    5,000Bank revolving line of credit
    
    
    
    
    
    
    990Bank term loan
    
    
    11,750
    
    
    
    14,007Capital lease obligations and other
    
    
    1,200
    
    
    
    36816,150
    
    
    
    20,365Less current maturities
    
    
    (6,948
    )
    
    
    (8,311
    )Long-term debt, less current maturities
    
    $
    9,202
    
    
    $
    12,054
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Note 5: Income Taxes
     Note 6: Contingencies
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Note 7: Stock Options
 ,
 WeightedShares Subject
    
    
    Averageto Stock
    
    
    ExerciseOptions
    
    
    Price(in thousands)Balance at December 31, 2006
    
    
    4,906
    
    
    $
    2.61Granted
    
    
    725
    
    
    
    2.86Exercised
    
    
    (444
    )
    
    
    0.79Cancelled
    
    
    (381
    )
    
    
    3.84Balance at September 30, 2007
    
    
    4,806
    
    
    
    2.72
  Options Outstanding
    
    
    Options ExercisableNumber
    
    
    
    
    
    
    Weighted
    
    
    Numberof
    
    
    Weighted
    
    
    Average
    
    
    of
    
    
    WeightedShares
    
    
    Average
    
    
    Remaining
    
    
    Shares
    
    
    Average(in
    
    
    Exercise
    
    
    Contractual
    
    
    (in
    
    
    Exercisethousands)
    
    
    Price
    
    
    Life (years)
    
    
    thousands)
    
    
    PriceRange of Exercise Prices:$0.49 to $1.00
    
    
    870
    
    
    $
    0.53
    
    
    
    4.7
    
    
    
    870
    
    
    $
    0.53$1.49 to $2.49
    
    
    1,563
    
    
    
    2.27
    
    
    
    5.0
    
    
    
    1,401
    
    
    
    2.26$2.72 to $3.99
    
    
    1,404
    
    
    
    3.28
    
    
    
    8.1
    
    
    
    378
    
    
    
    3.11$4.00 to $4.99
    
    
    828
    
    
    
    4.46
    
    
    
    7.2
    
    
    
    475
    
    
    
    4.43$5.00 to $6.19
    
    
    141
    
    
    
    5.30
    
    
    
    7.7
    
    
    
    88
    
    
    
    5.32Total at September 30, 2007
    
    
    4,806
    
    
    
    2.72
    
    
    
    6.3
    
    
    
    3,212
    
    
    
    2.30
 Note 8: United Tote Acquisition
  
    
    $9.75 million in cash;
    
    Three unsecured promissory notes with an aggregate principal amount of $10.2 million; and
    
    2,181,818 shares of Youbet common stock subject to a make-whole provision valuing such
 shares at $5.50 per share.
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Nine Months Ended September 30,2007
    
    
    2006As reported
    
    
    Pro forma
    
    
    As reportedRevenue
    
    $
    110,399
    
    
    $
    106,746
    
    
    $
    104,396Net income
    
    $
    1,295
    
    
    $
    2,855
    
    
    $
    3,105Earnings per share  basic
    
    $
    0.03
    
    
    $
    0.08
    
    
    $
    0.09Earnings per share  diluted
    
    $
    0.03
    
    
    $
    0.07
    
    
    $
    0.08
 Note 9: Segment Reporting
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited, in thousands)RevenueAdvance deposit wagering segment
    
    $
    31,652
    
    
    $
    30,539
    
    
    $
    92,121
    
    
    $
    87,234Totalizator services segment
    
    
    7,167
    
    
    
    6,822
    
    
    
    20,023
    
    
    
    17,88038,819
    
    
    
    37,361
    
    
    
    112,144
    
    
    
    105,114Intersegment eliminations
    
    
    (691
    )
    
    
    (311
    )
    
    
    (1,745
    )
    
    
    (718
    )$
    38,128
    
    
    $
    37,050
    
    
    $
    110,399
    
    
    $
    104,396Revenue by Geographic AreaUnited States
    
    $
    37,411
    
    
    $
    36,323
    
    
    $
    108,675
    
    
    $
    102,777International
    
    
    717
    
    
    
    727
    
    
    
    1,724
    
    
    
    1,619$
    38,128
    
    
    $
    37,050
    
    
    $
    110,399
    
    
    $
    104,396Reconciliation to Income (Loss)
Before Income Tax BenefitIncome (loss) from operationsAdvance deposit wagering segment
    
    $
    795
    
    
    $
    (44
    )
    
    $
    3,437
    
    
    $
    2,287Totalizator services segment
    
    
    (522
    )
    
    
    (270
    )
    
    
    (1,569
    )
    
    
    890273
    
    
    
    (314
    )
    
    
    1,868
    
    
    
    3,177Interest income
    
    
    168
    
    
    
    137
    
    
    
    553
    
    
    
    423Interest expense
    
    
    (460
    )
    
    
    (551
    )
    
    
    (1,478
    )
    
    
    (1,272
    )Other
    
    
    27
    
    
    
    161
    
    
    
    45
    
    
    
    756Income (loss) before income tax benefit
    
    $
    8
    
    
    $
    (567
    )
    
    $
    988
    
    
    $
    3,084
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September 30,
    
    
    December 31,2007
    
    
    2006(unaudited, in thousands)Total AssetsAdvance deposit wagering segment
    
    $
    38,454
    
    
    $
    50,280Totalizator services segment
    
    
    54,667
    
    
    
    55,325$
    93,121
    
    
    $
    105,605
 Note 10: Intangibles and Goodwill
  Intangibles
    
    
    GoodwillAdvance
    
    
    
    
    
    
    Advancedeposit
    
    
    
    
    
    
    depositwagering
    
    
    Totalizator
    
    
    wagering
    
    
    Totalizatorsegment
    
    
    segment
    
    
    segment
    
    
    segment(unaudited, in thousands)Balance as of January 1, 2007
    
    $
    6,123
    
    
    $
    7,246
    
    
    $
    384
    
    
    $
    14,859Additions
    
    
    2,372
    
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    (873
    )
    
    
    (626
    )
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    (384
    )
    
    
    Balance as of September 30, 2007
    
    $
    7,622
    
    
    $
    6,620
    
    
    $
    0
    
    
    $
    14,859
   Note 11: Subsequent Events
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Item 2. Managements discussion and analysis of financial condition and results of operations
 Forward-looking statements
  Overview
  www.youbet.com
    - 12 -




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Critical accounting estimates and policies
  Revenues
   Allowance for doubtful accounts
  
    
    customer-specific allowance;
    
    amounts based upon an aging schedule; and
    
    an estimated amount, based on our historical experience, for issues not yet identified.
 Inventory obsolescence
  Valuation of long-lived assets
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
    
    significant underperformance relative to expected historical or projected future
operating results;
    
    significant changes in the manner of our use of the acquired assets or the strategy of
our overall business;
    
    significant negative industry or economic trends;
    
    significant decline in our stock price for a sustained period; and
    
    our market capitalization relative to net book value.
   Internally developed software
 Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use,
 Recent accounting pronouncements
  Fair Value Measurements. The Fair Value Option for Financial Assets and Financial Liabilities 
including an amendment of FAS 115.
 Results of operations for the three months ended September 30, 2007 compared to
the three months ended September 30, 2006
 Revenues
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Operating expenses
 Track fees
 Licensing fees:
 Contract costs
 Network operations
 Research
and development
 Sales and marketing
 General and administrative
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Depreciation and amortization
 Goodwill impairment:
 Other income (expense)
 Results of operations for the nine months ended September 30, 2007 compared to
the nine months ended September 30, 2006
 Revenues
    Operating expenses
 Track fees
 Licensing fees
 Contract costs
 Network operations
 Research and development
 Sales and marketing
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General and administrative
 Depreciation and amortization
 Goodwill impairment:
 Interest expense
 Other income
 Outlook for the remainder of 2007
   Liquidity and capital resources
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Credit facility
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IRG
     Competition
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Regulatory Developments
    NYRA bankruptcy
  
 Item 3. Quantitative and qualitative disclosures about market risk
  
 Item 4. Controls and procedures
   
    
    Pervasive control deficiencies across key Committee of Sponsoring Organizations of the
Treadway Commission components, including information technology general controls (ITGC),
information technology (IT) application controls, and business processes.
    
    Pervasive control deficiencies across key ITGC categories relating to IT operations,
planning and management.
    
    Control deficiencies across key business processes at all operating units.
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
    
    hired a new Chief Financial Officer on July 9, 2007, allowing our Chief Operating
Officer who had been acting as interim Chief Financial Officer to fully resume his role;
    
    completed the evaluation of remediation requirements for IRG and our IT operations;
 
    
    developed and documented Youbet Express business processes related to governance, trade payables and financial
statement closing, consolidation and reporting;
    
    developed and documented United Totes business processes related to revenues and account receivables, trade
payables, fixed assets, HR/payroll and benefits, treasury and cash, and inventory; and
    
    developed and documented IRGs business processes related to revenues and account receivables, trade
payables, HR/payroll and benefits, and treasury and cash.
     
 Part II. Other information
 
 Item 1. Legal proceedings
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Item 1A. Risk factors
 
  
    
    We face strong competition from the Television Games Network and others.
    
    Our inability to retain our relationships with our content providers would have a
material adverse effect on our business.
    
    Our inability to collect revenue due to the NYRA bankruptcy could reduce our revenue and
cause our businesses to suffer.
 The U.S. governments investigation into the wagering activities of certain IRG customers may
adversely affect our financial condition, results of operations and the price of our common stock.
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The U.S. governments seizure of $1.5 million held in IRG bank accounts may adversely affect our
financial condition and results of operations.
  The ORC has indicated by notice their intent to commence the process of seeking suspension of IRGs
license which may adversely affect our business.
  
 Item 2. Unregistered sales of equity securities and use of proceeds
   (c)
    
    In March 2007, our board of directors authorized a $10.0 million repurchase of up to two
million shares of our common stock and, in April 2007, we reached an agreement with our lender
to amend our credit agreement to allow repurchases in those aggregate amounts. Share
repurchases are administered by a special committee of directors, must be made on or before
March 31, 2009, but may not be made at any time we are in default under the terms of our
credit agreement or do not meet certain liquidity thresholds. Since the inception of this
repurchase program and for the quarter ended September 30, 2007, we have repurchased 586,766
shares of our common stock at a weighted average price of $1.71 per share for an aggregate of
approximately $1.0 million in repurchases under the program. We used cash on hand and cash
provided by operating activities to fund the share repurchases. Future repurchases may occur
from time to time.
 ApproximateTotal Number of
    
    
    Dollar Value ofShares Purchased
    
    
    Shares that Mayas Part of Publicly
    
    
    Yet Be PurchasedTotal Number of
    
    
    Average Price
    
    
    Announced
    
    
    Under thePeriod
    
    Shares Purchased
    
    
    Paid Per Share
    
    
    Program
    
    
    ProgramJuly 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    $                 10.0 millionAugust 2007
    
    
    419,866
    
    
    $
    1.70
    
    
    
    419,866
    
    
    $                   9.3 millionSeptember 2007
    
    
    166,900
    
    
    $
    1.74
    
    
    
    586,766
    
    
    $                   9.0 million
 
 Item 3. Defaults upon senior securities
  
 Item 4. Submission of matters to a vote of security holders
  
 Item 5. Other information




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Item 6. Exhibits
 3.1
    
    Certificate of Incorporation of Youbet.com, Inc., as amended (incorporated by reference to Exhibit 3.1 to
Youbets quarterly report on Form 10-QSB for the quarter ended September 30, 2003).3.2
    
    Amended and Restated Bylaws of Youbet.com, Inc. (incorporated by reference to Exhibit 3.1 to Youbets
current report on Form 8-K filed April 20, 2007).10.1
    
    Credit Agreement dated as of July 27, 2006, by and among Youbet.com, Inc. and United Tote Company, as
borrowers, the lenders signatory thereto, as lenders, and Wells Fargo Foothill, Inc., as arranger and
administrative agent (incorporated by reference to Exhibit 10.1 to Youbets current report on Form 8-K
filed July 28, 2006).10.2
    
    First Amendment to Credit Agreement and Waiver, dated as of March 14, 2007, by and among Youbet.com, Inc.
and United Tote Company, as borrowers, and Wells Fargo Foothill, Inc., as arranger and agent (incorporated
by reference to Exhibit 10.16 to Youbets annual report on Form 10-K for the year ended December 31,
2006).10.3
    
    Waiver of Event of Default, dated as of August 3,
2007, by and among Youbet.com, Inc., as administrative borrower, and
Wells Fargo Foothill, Inc., as administrative agent (incorporated by
reference to Exhibit 10.3 to Youbets quarterly report on Form
10-Q for the period ended June 30, 2007).10.4
    
    Consent to Stock Repurchase, dated April 10, 2007, between Youbet.com, Inc., as administrative borrower,
and Wells Fargo Foothill, Inc., as administrative agent (incorporated by reference to Exhibit 10.3 to
Youbets current report on Form 8-K filed April 11, 2007).10.5
    
    Waiver of Default Side Letter Agreement, dated as of October 30, 2007, by and
among Youbet.com, Inc. and United Tote Company, as borrowers and
Wells Fargo Foothills, Inc., as administrative agent (incorporated
by reference to Exhibit 10.5 to Youbets current report on Form 8-K filed November 5, 2007).10.6
    
    Waiver, dated as of November 8, 2007, by and among
Youbet.com, Inc., and United Tote Company, as borrowers, and
Wells Fargo Foothill, Inc., as administrative agent.10.7
    
    Employment Agreement, dated as of July 9, 2007, by and between Youbet.com, Inc. and James A. Burk
(incorporated by reference to Exhibit 10.1 to Youbets current report on Form 8-K filed July 11, 2007).*31.1
    
    Certification of President and Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    Certification Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.
 *
    Management contract or compensatory plan.  - 24 -




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SIGNATURES
  YOUBET.COM, INC.November 9, 2007
    By:
    /s/ Charles F. ChampionCharles F. ChampionPresident and Chief Executive OfficerNovember 9, 2007
    By:
    /s/ James A. BurkJames A. BurkChief Financial Officer  - 25 -




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Exhibit Index
 ExhibitNumber
    
    Description10.6
    
    Waiver, dated as of November 8,
2007, by and among Youbet.com, Inc., and United Tote Company, as
borrowers, and
Wells Fargo Foothill, Inc., as administrative agent.31.1
    
    Certification of President and Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    Certification Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.
  - 26 -