<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   -----------

                                   Form 10-QSB


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

                       COMMISSION FILE NUMBER: 33-13789LA

                                   -----------

                                YOUBET.COM, INC.


           DELAWARE                                    95-4627253

             5901 DE SOTO AVENUE, WOODLAND HILLS, CALIFORNIA 91367

                                 (818) 668-2100


Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.  Yes  X  No ___

As of May 9, 2003, the issuer had 30,274,046 shares of common stock issued and
outstanding. The aggregate market value of the issuer's common stock held by
non-affiliates (assuming that the Registrant's only affiliates are its officers,
directors and 10% or greater stockholders) of the issuer as of May 9, 2003 was
approximately $98,996,130 based upon the closing market price of $3.27 per
common share on that date as reported on the Nasdaq SmallCap Market.

<PAGE>

                                YOUBET.COM, INC.
                              INDEX TO FORM 10-QSB
                              FOR THE QUARTER ENDED
                                 MARCH 31, 2003

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>          <C>                                                                                  <C>
PART I.      FINANCIAL INFORMATION

   Item 1.   Financial Statements

                Condensed Consolidated Balance Sheet as of March 31, 2003
                  (unaudited) and December 31, 2002                                                 3

                Condensed Consolidated Statements of Operations for the
                  three months ended March 31, 2003 and March 31, 2002 (unaudited)                  4

                Condensed Consolidated Statements of Cash Flows for the three
                  months ended March 31, 2003 and March 31, 2002 (unaudited)                        5

                Notes to Unaudited Condensed Consolidated Financial Statements                      6

   Item 2.   Management's Discussion and Analysis or Plan of Operation                             17

   Item 3.   Controls and Procedures                                                               22

PART II.     OTHER INFORMATION

   Item 1.   Legal Proceedings                                                                     22

   Item 2.   Changes in Securities and Use of Proceeds                                             23

   Item 3.   Defaults Upon Senior Securities                                                       23

   Item 4.   Submission of Matters to a Vote of Security Holders                                   23

   Item 5.   Other Information                                                                     23

   Item 6.   Exhibits and Reports on Form 8-K                                                      23

   Signatures                                                                                      24

   Certifications                                                                                  26

   Exhibit 99.1: Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002          29
</TABLE>

                                       2
<PAGE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                                YOUBET.COM, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                MARCH 31,       DECEMBER 31,
                                                                                  2003              2002
                                                                              ------------      ------------
                                                                               (UNAUDITED)        (AUDITED)
<S>                                                                           <C>               <C>
ASSETS:
      Current Assets:
           Cash and Cash Equivalents                                          $  5,136,182      $  4,559,897
           Restricted Cash, current (Note 2)                                     2,633,217         2,351,421
           Receivables (Note 3)                                                    580,228           790,686
           Interest and Other Receivables                                           20,897            23,682
           Prepaid Expenses                                                        385,575           436,119
                                                                              ------------      ------------
      Total Current Assets                                                    $  8,756,099      $  8,161,805
      Property and Equipment, net                                                3,633,604         3,953,912
      Licensing Rights, net  (Note 4)                                            4,118,984         5,022,830
      Deferred Lease Costs                                                          32,473            33,521
      Deposits (Note 6)                                                          1,300,785         1,300,785
                                                                              ------------      ------------
           TOTAL ASSETS                                                       $ 17,841,945      $ 18,472,853
                                                                              ============      ============

LIABILITIES AND STOCKHOLDER'S EQUITY
      Current Liabilities:
           Accounts Payable - Trade                                                599,455           604,417
           Fees Payable to Related Party  (Note 4)                               1,179,409         2,113,540
           Accounts Payable - Track Related  (Note 5)                            2,850,059         4,293,289
           Interest Payable                                                         26,301                --
           Accrued Expenses                                                      1,569,031           729,735
           Customer Deposits                                                     1,955,544         1,477,255
           Accrued Compensation and Related Items  (Note 8)                        237,432           532,796
           Deferred Revenues                                                        64,338            26,577
           Notes Payable, face $750,000, net of unamortized
                 discount of $97,807  (Note 7)                                          --           652,193
                                                                              ------------      ------------
      Total Current Liabilities                                               $  8,481,569      $ 10,429,802

           Notes Payable, face $2,000,000, net of unamortized
                 discount of $484,562  (Note 7)                                  1,515,438                --
                                                                              ------------      ------------
           TOTAL LIABILITIES                                                  $  9,997,007      $ 10,429,802
                                                                              ============      ============

      Stockholders' Equity:
           Preferred Stock, $0.001 par value, authorized                                --                --
                 1,000,000 shares, none outstanding
           Common Stock, $0.001 par value, authorized 100,000,000 shares
                 23,812,139 and 23,422,600 shares outstanding
                 as of March 31, 2003 and December 31, 2002, respectively     $     23,811      $     23,422
           Additional Paid In Capital                                           96,912,837        95,863,660
           Accumulated Deficit                                                 (89,091,710)      (87,844,031)
                                                                              ------------      ------------
           TOTAL STOCKHOLDERS' EQUITY                                         $  7,844,938      $  8,043,051
                                                                              ------------      ------------
           TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                         $ 17,841,945      $ 18,472,853
                                                                              ============      ============
</TABLE>

                 See Accompanying Notes to Financial Statements

                                       3
<PAGE>

                                YOUBET.COM, INC.
                  CONDENSED CONSOLIDATED STATEMENT OF OPERATION

<TABLE>
<CAPTION>
                                                               QUARTER ENDED MARCH 31,
                                                           ------------------------------
                                                              2003             2002
                                                           ------------      ------------
<S>                                                        <C>               <C>
REVENUES  (NOTES 4 AND 5)
     Commissions                                           $ 10,845,220      $  2,568,970
     Subscription and Transaction Fees                           84,874               312
     Race Information                                            76,313            47,933
                                                           ------------      ------------
TOTAL REVENUES                                             $ 11,006,407      $  2,617,215
OPERATING EXPENSES:
     Track Fees                                               5,853,827           457,000
     Licensing Fees - Related Party  (Note 4)                 1,323,835           439,037
     Network Operations                                         438,902           491,935
     Research and Development                                   500,181           489,383
     Sales and Marketing                                        257,533           584,079
     General and Administrative                               2,167,129         1,663,570
     Depreciation and Amortization                            1,384,260         1,398,796
                                                           ------------      ------------
TOTAL OPERATING EXPENSES                                   $ 11,925,667      $  5,523,800
                                                           ------------      ------------
LOSS FROM OPERATIONS                                       $   (919,260)     $ (2,906,585)
                                                           ============      ============
OTHER INCOME (EXPENSE):
     Interest Income                                              8,786            16,464
     Interest Expense                                          (395,150)           (5,407)
     Other Income                                                57,945                --
                                                           ------------      ------------
TOTAL OTHER INCOME (EXPENSE)                               $   (328,419)     $     11,057
                                                           ------------      ------------
LOSS BEFORE TAXES                                          $ (1,247,679)     $ (2,895,528)
     Taxes                                                           --                --
                                                           ------------      ------------
NET LOSS                                                   $ (1,247,679)     $ (2,895,528)
                                                           ============      ============

BASIC AND DILUTED LOSS PER SHARE:
     Net Loss per Common Share                             $      (0.05)     $      (0.15)
                                                           ------------      ------------
     Weighted Average No. of Common Shares Outstanding       23,519,239        19,537,950
                                                           ============      ============
</TABLE>

                 See Accompanying Notes to Financial Statements

                                       4
<PAGE>

                                YOUBET.COM, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         QUARTER ENDED MARCH 31,
                                                                                      ----------------------------
                                                                                         2003             2002
                                                                                      -----------      -----------
<S>                                                                                   <C>              <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
      CASH FLOWS FROM OPERATING ACTIVITIES:
            Net Loss                                                                  $(1,247,679)     $(2,895,528)
      ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
            Depreciation and Amortization                                               1,384,260        1,398,796
            Amortization of Fair Value of Warrants Issued for Financing Costs                  --            2,395
            Non-Cash Interest Expense                                                     358,638               --
            Stock-Based Compensation                                                       51,009          135,772
            Loss on Disposal of Assets                                                        250               --
      CHANGE IN OPERATING ASSETS AND LIABILITIES:
            Receivables                                                                   210,458         (186,580)
            Interest and Other Receivables                                                  2,785         (110,444)
            Prepaid Expenses                                                               50,544          205,815
            Deposits                                                                        1,048         (498,951)
            Account Payable - Trade                                                        (4,962)         220,809
            Fees Payable - Related Parties                                               (934,131)              --
            Accounts Payable - Track Related                                           (1,443,230)              --
            Interest Payable                                                              (43,664)              --
            Accrued Expenses                                                              909,261          233,032
            Customer Deposits                                                             478,289          168,708
            Accrued Compensation and Related Items                                       (295,364)          88,140
            Deferred Revenues                                                              37,761               33
                                                                                      -----------      -----------
                  NET CASH USED IN OPERATING ACTIVITIES                               $  (484,727)     $(1,238,003)
                                                                                      -----------      -----------
      CASH FLOWS FROM INVESTING ACTIVITIES:
            Restricted Cash                                                              (281,796)              --
            Purchases of Property and Equipment                                          (160,356)         (34,677)
                                                                                      -----------      -----------
                  NET CASH USED IN INVESTING ACTIVITIES                               $  (442,152)     $   (34,677)
                                                                                      -----------      -----------
      CASH FLOWS FROM FINANCING ACTIVITIES:
            Proceeds from Exercise of Stock Options and Warrants                          253,164               --
            Proceeds from Notes Payable                                                 2,000,000          750,000
            Payments of Notes Payable                                                    (750,000)              --
                                                                                      -----------      -----------
                  NET CASH PROVIDED BY FINANCING ACTIVITIES                           $ 1,503,164      $   750,000
                                                                                      -----------      -----------
      NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            $   576,285      $  (522,680)
      CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD                          4,559,897        3,560,740
                                                                                      -----------      -----------
      CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD                              $ 5,136,182      $ 3,038,060
                                                                                      ===========      ===========

      SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
            Cash Paid for Interest                                                    $    80,137      $       639
            Reclassification of Restricted Cash to Deposits                                    --          920,805
            Cash Paid for Income Tax                                                           --               --
                                                                                      ===========      ===========

      NON-CASH INVESTING AND FINANCING ACTIVITIES:
            Issuance of Warrants for $2 million note                                  $   518,223      $        --
            Issuance of Warrants for Licensing Rights                                          --          437,137
                                                                                      ===========      ===========
</TABLE>

                 See Accompanying Notes to Financial Statements

                                       5
<PAGE>

YOUBET.COM, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

      BUSINESS

            Youbet.com, Inc. ("Youbet.com", "Youbet", or the "Company") has
            established itself as a leading, global brand name for online, live
            event sports entertainment and wagering. Wagering on live events,
            such as horse racing, car racing, soccer, football, and other
            sporting events is a large global industry which adapts well to the
            Internet. The Company has focused on the United States horse race
            wagering market through its main product, Youbet ExpressSM, which
            features online wagering, simulcast, and in-depth, up-to-the-minute
            information on horse racing. The Company is working to expand the
            Youbet.com brand, its products, and its services throughout the
            United States and select international markets. The Company
            currently provides its customers with the ability to receive
            interactive, real-time audio/video broadcasts directly into their
            computers, access a comprehensive database of handicapping
            information and, in most states, wager on a wide selection of U.S.,
            Canadian, and Australian horse races.

            In 2002, greater than 80% of all United States horse race wagers
            were placed through an off-track facility. Off-track wagering is
            typically captured through inter-track simulcasts, off-track betting
            (OTB) facilities, telephone-based live operator and interactive
            voice recognition (IVR), and PC-based and wireless transmissions.
            This dramatic shift from at-the-track to off-track wagering was
            driven by racing enthusiasts' desire for convenient, remote access
            to a wide range of horse racing events, the ability to deliver this
            service through developments in electronic systems, and the
            relatively new concept of advance deposit wagering (ADW). ADW is
            accomplished when a customer opens an account with a state-licensed
            entity and then deposits funds into that account for future
            wagering. Customers may then use their funds plus any realized
            winnings for on-going wagering.

      BASIS OF PRESENTATION

            In the opinion of management, the accompanying unaudited condensed
            financial statements for the three months ended March 31, 2003 and
            2002 include all adjustments (consisting of normal recurring
            accruals) which management considers necessary to present fairly the
            financial position of the Company as of March 31, 2003, the results
            of its operations for the three months ended March 31, 2003 and
            March 31, 2002, and its cash flows for the three months ended March
            31, 2003 in conformity with accounting principles generally accepted
            in the United States. These financial statements have been prepared
            consistently with the accounting policies described in the Company's
            Annual Report on Form 10-KSB for the year ended December 31, 2002,
            as filed with the Securities and Exchange Commission on April 15,
            2003, and should be read in conjunction with this Quarterly Report
            on Form 10-QSB. The results of operations for the three months ended
            March 31, 2003 are not necessarily indicative of the consolidated
            results of operations to be expected for the full fiscal year ending
            December 31, 2003. Certain information and footnote disclosures
            normally included in the financial statements


                                       6

<PAGE>


            presented in accordance with accounting principles generally
            accepted in the United States have been condensed or omitted.

            Youbet.com, Inc., a Delaware corporation, and its wholly owned
            subsidiary, Youbet Oregon, Inc., are collectively referred to herein
            as "Youbet.com", "Youbet", or the "Company". All intercompany
            accounts and transactions have been eliminated in consolidation.

      USE OF ESTIMATES

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States
            requires management to make estimates and assumptions that affect
            the reported amounts of assets and liabilities and disclosure of
            contingent assets and liabilities as of the date of the financial
            statements and the reported amounts of revenues and expenses during
            the reporting period. Actual results could materially differ from
            these estimates.

      BASIC AND DILUTED LOSS PER SHARE

            Basic loss per share is calculated by dividing net loss by the
            weighted average number of common shares outstanding during the
            period. Diluted loss per share is calculated by dividing net loss by
            the basic shares outstanding and all dilutive securities, including
            stock options, warrants, convertible notes, and preferred stock, but
            does not include the impact of potential common shares which would
            be anti-dilutive. As of March 31, 2003, total warrants outstanding
            were 21,092,627 with exercise prices between $0.10 to $19.50 and
            total stock options outstanding were 6,424,878 with exercise prices
            between $0.26 and $6.13.

      CONCENTRATION OF CREDIT RISK

            The Company maintains cash balances at various financial
            institutions. Deposits not exceeding $100,000 for each institution
            are insured by the Federal Deposit Insurance Corporation. At March
            31, 2003 and December 31, 2002, the Company had uninsured cash and
            cash equivalents and restricted cash of $7,479,813 and $4,440,698,
            respectively.

      RECLASSIFICATIONS

            Certain prior period amounts have been reclassified to conform to
            the current period presentation.

NOTE 2: RESTRICTED CASH, CURRENT

      PLAYERS TRUSTSM

            As of March 31, 2003, the balance of customer accounts maintained in
            Players TrustSM was $1,909,641 all which is recorded as restricted
            cash, current. This amount was $132,174 in excess of customer
            deposits.


                                       7
<PAGE>


      CREDIT CARD RESERVES

            The Company uses outside vendors to process its credit card and
            check transactions. These vendors require the Company to keep in
            reserve, for up to six months, a certain percentage of the total
            amounts processed as a reserve against any future potential losses.
            As of March 31, 2003, these reserves amounted to $473,576 all of
            which is recorded as restricted cash, current.

      OREGON RACING COMMISSION

            The Company placed a Letter of Credit with the Oregon Racing
            Commission in the amount of $250,000 to secure customer deposits on
            hand for Oregon residents. As of March 31, 2003, the letter of
            credit is recorded as restricted cash, current.

NOTE 3: RECEIVABLES

            As of March 31, 2003, receivables of $580,228 primarily consist of
            (1) $213,782 due from Magna Entertainment Corporation for fees
            earned on handle generated through Magna's Call-A-Bet system, (2)
            $149,353 due from various tracks for settlement of wagers processed
            through the Company's Oregon hub, and (3) $215,734 due from the
            Company's landlord.

            As of December 31, 2002, receivables of $790,686 primarily consist
            of (1) $302,000 due from Magna Entertainment Corporation for fees
            earned on wagers processed through Magna's Call-A-Bet system, (2)
            $377,000 due from various tracks for settlement of wagers processed
            through the Company's Oregon Hub, and (3) $107,867 due from the
            Company's landlord.

NOTE 4: LICENSING RIGHTS - RELATED PARTY

      TVG LICENSING FEES

            In May 2001, Youbet entered into a track content and patent license
            agreement (the "License Agreement") and a warrant issuance agreement
            with TVG. These agreements relate to the grant by TVG to Youbet of a
            non-exclusive license to use telephones and certain simulcast audio,
            video and data content for the purpose of streaming such content
            online and the agreement of racetracks to accept wagers based on
            such content, and to use TVG's patented systems for making
            pari-mutuel wagers on horse races online. Among other things, the
            agreements call for Youbet to issue to TVG two warrants to purchase
            common stock of the Company as described below.

            The License Agreement remains in effect until the later of (i) May
            18, 2011, (ii) the date of expiration of the last to expire of the
            TVG patents licensed to Youbet under the agreement, or (iii) the
            date on which the last of TVG's agreements with the TVG Exclusive
            Tracks expires (unless extended, TVG's agreements with the TVG
            Exclusive Tracks expire before May 18, 2011). The License Agreement
            may be terminated before the expiration of its term (a) by TVG, if
            Youbet ceases to operate its Oregon account wagering hub or another
            account wagering facility approved by TVG at any time thereafter
            during the term; (b) by TVG, in the event that Youbet brings any
            legal action against TVG or any of TVG's affiliates, including
            Gemstar-TV Guide International, unless it is finally determined in
            such action that TVG (or its affiliate) acted in bad faith with
            respect to any claim that is the


                                       8
<PAGE>


      subject of the legal action; and (c) by either Youbet or TVG, in the event
      that the other party materially breaches the License Agreement without
      cure upon notice.

            In consideration of the rights granted to Youbet under the License
            Agreement, Youbet has agreed to pay to TVG fees based on the handle
            generated by Youbet from wagering activity and to issue to TVG the
            warrants to purchase Youbet common stock on the terms and conditions
            set forth in the Warrant Issuance Agreement, as described below. The
            TVG fees are as follows:

                  |X|   With respect to wagers processed through an account
                        wagering facility other than Magna, 5.5% of the total
                        handle on races conducted at the TVG Exclusive Tracks
                        which include Aqueduct, Arlington International, Belmont
                        Park, Calder Race Course, Churchill Downs, Del Mar,
                        Ellis Park, Emerald Downs, Fairplex Park, Hollywood
                        Park, Hoosier Park, Keeneland, Laurel Park, Lone Star
                        Park, Los Alamitos, Oak Tree/Santa Anita, Pimlico,
                        Portland Meadows, Prairie Meadows, Ruidoso Downs,
                        Saratoga, Saratoga Harness, Suffolk Downs, Turf
                        Paradise, and Turfway Park. For purposes of determining
                        these and other fees payable under the License Agreement
                        with respect to the TVG Exclusive Tracks, tracks owned,
                        controlled or operated by Magna will be deemed to be TVG
                        Exclusive Tracks to the extent that TVG enters into any
                        agreement with any such track which provides for TVG to
                        have simulcast and account wagering rights on races from
                        such track. These Magna tracks include nine tracks
                        currently available on the Youbet network.

                  |X|   With respect to wagers processed through Magna on races
                        conducted at the TVG Exclusive Tracks, the entire
                        commission or other consideration paid to Youbet with
                        respect to such wagers.

                  |X|   With respect to wagers conducted at four designated
                        non-TVG Exclusive Tracks, 3.0% of the total handle
                        (including wagers processed through Magna).

                        The License Agreement also provides that Youbet will pay
                        to TVG the following fees:

                  |X|   At such time as Youbet opens its own account wagering
                        facility, with respect to wagers accepted or processed
                        through an account wagering facility other than Magna,
                        Youbet will charge customers a transaction fee of 25
                        cents per wager, with the first $3.00 of such fees per
                        customer per month being retained by Youbet, the next
                        $3.00 per customer per month being paid to TVG, and any
                        remaining amounts per customer per month being split
                        equally between the parties.

                  |X|   Commencing with the opening of Youbet's own account
                        wagering facility, with respect to account wagers
                        processed through Magna, Youbet will, at its election,
                        charge customers either a transaction fee per wager of
                        25 cents or a monthly subscription fee of not less than
                        $5.95 and will split such fees equally with TVG. Youbet
                        is permitted to defer payment of these fees until such
                        time as it achieves positive cash flow sufficient to pay
                        the deferred fees. Also, Youbet is permitted to modify
                        or waive transaction fees for certain customers,
                        provided that it shares any such fees from such
                        customers equally with TVG.


                                       9
<PAGE>

                  |X|   Commencing with the first calendar quarter in which
                        Youbet achieves positive cash flow, as defined in the
                        License Agreement, and then and thereafter only to the
                        extent of positive cash flow, 50% of gross advertising
                        revenues and 50% of the amount by which gross operating
                        margin (revenues less direct costs) from monthly
                        e-commerce revenues exceeds the gross operating margin
                        from e-commerce revenues for the calendar month of April
                        2001.

                  |X|   With respect to account wagers on races conducted at the
                        TVG Exclusive Tracks from Youbet customers in the states
                        where the TVG exclusive tracks are located, (i) pay
                        source market fees and host track fees in accordance
                        with the agreements between TVG and the applicable
                        racing associations and other participants in the horse
                        racing industry and (ii) pay applicable state taxes and
                        fees to the National Thoroughbred Racing Association,
                        subject to a cap of one percent of the total handle.

                  |X|   With respect to account wagers on races conducted at the
                        TVG Exclusive Tracks from Youbet customers in other
                        states other, (i) pay host track fees in accordance with
                        the agreements between TVG and the applicable racing
                        associations and other participants in the horse racing
                        industry and (ii) pay applicable state taxes.

                  |X|   With respect to account wagers on races conducted at
                        non-TVG Exclusive Tracks from Youbet customers with an
                        account address within a 25-mile radius of any TVG
                        Exclusive Track, Youbet will pay to TVG 10% of all such
                        account wagers, and TVG will retain 50% of such amount
                        and divide the remaining 50% between the TVG Exclusive
                        Tracks and Youbet's partner tracks located within the
                        25-mile radius.

            The Company issued to TVG an initial warrant (the "Initial TVG
            Warrant"), on May 18, 2001 (the time the Warrant Agreement was
            executed) entitling TVG to purchase an aggregate of up to 3,884,650
            shares of Youbet common stock (the "Initial Warrant Shares") at an
            exercise price of $0.001 per share exercisable for a period of three
            years. The Company recorded the fair value of the Initial TVG
            Warrant, ($2,910,000), using the Black-Scholes method, as a deferred
            asset captioned "Licensing Rights" and is being amortized over three
            years, the estimated life of the licensed technology. Accumulated
            amortization as of March 31, 2003 was $1,803,881. The Initial
            Warrant was exercised during the quarter ended June 30, 2002,
            resulting in cash proceeds to the Company of $3,885 and issuance of
            3,884,650 shares of Youbet.com common stock.

            The Company issued to TVG an additional warrant (the "Additional TVG
            Warrant"), on September 20, 2001 (the time the Warrant Agreement was
            approved by the stockholders) entitling TVG to purchase from the
            Company at any time prior to 5:00 p.m. Pacific Standard Time on May
            18, 2004, for an aggregate exercise price of $41,082,422 (subject to
            adjustment as provided in the Additional TVG Warrant) a number of
            shares of common stock which, when aggregated with the Initial TVG
            Warrant Shares, is equal to 51% of the sum of (i) the total number
            of shares of Youbet common stock outstanding on the date the
            Additional TVG Warrant is exercised, plus (ii) the total number of
            shares of common stock issuable upon exercise of the Additional TVG
            Warrant, plus (iii) the total number of Initial Warrant Shares then
            issuable upon exercise of the Initial TVG Warrant. The Company
            recorded the fair value of the Additional TVG Warrant, ($7,054,000),
            using the Black-Scholes method, as a deferred asset captioned
            "Licensing Rights" which is being



                                       10
<PAGE>


            amortized over three years. Accumulated amortization as of March 31,
            2003 was $4,041,492.

            The Company is obligated to issue additional warrants to TVG (in
            order to maintain TVG's rights in acquiring 51% of the Company) upon
            the exercise of any stock options or warrants, or if the Company
            issues any additional securities. The number of warrants to be
            issued to TVG would be equivalent to the number of stock options or
            warrants exercised or the number of additional securities issued. In
            addition, the Additional TVG Warrant contains provisions for
            adjusting the exercise price in the event that (i) Youbet makes
            certain additional issuances of common stock or securities
            exercisable for or convertible into common stock at a price less
            than the defined reference price per share ($2.50 per share) on
            which the aggregate exercise price of the Additional TVG Warrant is
            based, or (ii) engages in certain issuer tender offers for the
            repurchase of shares of its common stock. As of May 15, 2003,
            acknowledged adjustments to the aggregate exercise price of the
            Additional TVG Warrant have resulted in an adjusted aggregate
            exercise price of $40,041,566.

            Estimated aggregate amortization expense related to Licensing Rights
            for the next three years is:

                                2003                        $3,615,383
                                2004                         1,407,447
                                                            ----------
                                Total                       $5,022,830
                                                            ==========

            We periodically review the carrying value of these rights based upon
            our estimates of future cash flows. While we believe our estimates
            of future cash flows are reasonable, different assumptions regarding
            such cash flows could materially affect our valuation.

NOTE 5: AGREEMENT WITH MAGNA AND INDEPENDENT TRACKS

            In addition to revenue generated from its relationship with TVG as
            discussed in Note 4, the Company generates revenue under agreements
            with Magna and various independent tracks.

            Magna Entertainment Corporation (Magna), one of the largest
            owners/operators of premier horse racetracks in the United States,
            acquires, develops, and operates horse racetracks and related
            pari-mutuel wagering operations. Magna tracks include Santa Anita
            Park, Gulfstream Park, Lone Star Park, Bay Meadow, Golden Gate
            Fields, Portland Meadows, Remington Park, Thistle Down, Great Lakes
            Downs, The Meadows, and Flamboro.

            In June 1997, Youbet entered into a Telecommunication Facilitation
            Agreement with Mountain Laurel Racing, Inc. and Washington Trotting
            Association, Inc., both subsidiaries of Ladbroke USA (collectively,
            "Ladbroke"). During 2001, Ladbroke was acquired by Magna. Under the
            agreement as modified, the Company provides Magna with an
            interactive graphics interface into Youbet ExpressSM through which
            Youbet customers who have established accounts with Magna's
            Call-A-Bet System may communicate with Magna to transmit wagering
            information.

            Pari-mutuel racetrack operators typically retain a portion of all
            wagers as their commission prior to distributing payoffs to the
            winners. In accordance with various agreements with Magna and


                                       11
<PAGE>

            independent racetracks, Youbet receives a pre-arranged fee from each
            racetrack for wagers delivered to their respective pari-mutuel
            pools. Through the introduction of the Total Access product, Youbet
            currently has independent simulcast agreements with over 65 tracks
            that are paid a host fee for their signal. These fees are based on
            handle generated by Youbet members to the respective tracks.

            For the three months ended March 31, 2003 and 2002, $484,259 and
            $918,661, respectively, of the Company's revenues were generated
            through the Magna simulcast agreement.

NOTE 6: DEPOSITS

            As of March 31, 2003, deposits primarily include (1) $705,071 lease
            deposit for the Company's Woodland Hills facility, (2) 500,000
            deposit for licensing with the California Horse Racing Board, and
            (3) $68,329 security deposit for the Company's Woodland Hills
            facility.

            As of December 31, 2002, deposits primarily include (1) $500,000
            deposit for licensing with the California Horse Racing Board, (2)
            $73,714 security deposit for the Company's Woodland Hills office,
            (3) $10,000 charge back deposit for Global Cash credit card
            processing, and (4) $12,840 deposit for satellite equipment through
            Stargate Industries.

NOTE 7: NOTES PAYABLE

            The Company entered into a Securities Purchase Agreement on March
            21, 2002, whereby the Company issued one-year secured notes (the
            "Notes") in the aggregate principal amount of $750,000 at an
            interest rate of 12% to the Company's new Chairman of the Board and
            Chief Executive Officer, and to seven other investors for their
            $750,000 loan to the Company. In connection with issuance of the
            Notes, the Company issued five-year warrants to purchase 750,000
            shares of the Company's common stock at an exercise price of $0.50
            per share. The warrants expire five years from the issuance date and
            contain certain registration rights and cashless exercise feature.
            Using the Black-Scholes model, the Company recorded the fair value
            of the warrants issued, $437,137, as a note discount and were
            amortized over one year as interest expense. Accumulated
            amortization of discount on the Notes was $339,330 as of December
            31, 2002. On January 24, 2003, the Notes were retired ahead of
            schedule and $80,137 for all accrued interest through February 8,
            2003, was paid.

            The Company entered into a second Securities Purchase Agreement on
            February 11, 2003, whereby the Company issued two-year unsecured
            notes (the "Second Notes") in the aggregate principal amount of
            $2,000,000 at an interest rate of 10% to several investors (the
            "Investors"). Interest is accrued monthly and paid quarterly;
            principal is due on February 11, 2005. In addition to the issuance
            of the Second Notes, the Company agreed to cause the assignment to
            the Investors of a portion of warrants previously issued by the
            Company. In this connection, holders of the Company's C and M
            warrants (the "Holders") were offered the opportunity to assign a
            portion of their warrants to the investors on the following basis:
            (a) the per share exercise price of warrants held by the Holders
            would be reduced to $.8075; (b) the term of the warrants would be
            extended to February 11, 2005; and (c) the number of warrant shares
            retained by the Holders would be reduced to 20% of the warrant
            shares that were currently issuable pursuant to the exercise of the
            warrants (the "Retained Warrant Shares"). The warrant shares other
            than the Retained Warrant Shares would be either


                                       12
<PAGE>

            cancelled by the Company or assigned to the Investors. During the
            quarter, warrants to acquire 693,194 shares of the Company's Common
            Stock were cancelled, the number of Retained Warrant Shares was
            2,034,963 and warrants to purchase an aggregate of 1,334,000 shares
            were assigned to the Investors at an exercise price of $0.8075 per
            share (representing a discount of 15% from the closing market price
            of the Company's Common Stock of $0.95 on the date of the Securities
            Purchase Agreement). As of March 31, 2003, the expensed value of
            Retained Warrant Shares was $227,170.

NOTE 8: ACCRUED COMPENSATION AND RELATED ITEMS

            On July 8, 1999, the Board approved the recommendation of the
            Compensation Committee to grant to David Marshall (through his
            wholly-owned subsidiary) and Russell Fine a bonus award of $300,000,
            payable $75,000 to each upon the Company achieving 15,000
            subscribers and $75,000 to each upon the Company achieving 25,000
            subscribers. As of March 31, 2003, the Company had accrued a total
            of $300,000 ($150,000 to each of Messrs. Marshall and Fine). The
            bonuses were paid on April 21, 2003.

            The Board approved the recommendation of the Compensation Committee
            to grant to Charles Champion an increase in annual compensation from
            $200,000 to $340,000 in connection with Mr. Champion's promotion to
            President and Chief Executive Officer of the Company effective
            September 1, 2002 through March 2005. The increase in compensation
            is being accrued until the Company achieves and sustains positive
            cashflow for at least two consecutive fiscal quarters. As of March
            31, 2003, compensation payable to Mr. Champion was $81,669.

NOTE 9: STOCKHOLDERS' EQUITY

            The Company has issued various stock options and warrants in
            non-capital raising transactions for services rendered and to be
            rendered, and as financing costs. The Company accounts for stock
            options and warrants granted to employees and non-employees in
            accordance with Statement of Financial Accounting Standards No. 123.
            The Company has calculated the fair value of such warrants and stock
            options according to the Black-Scholes pricing model.

            All securities described below were issued under an exemption to the
            registration requirements of the Securities Act of 1933, as amended,
            pursuant to Section 4(2) thereof and Regulation D.

      ISSUANCE OF WARRANTS

            During the three months ended March 31, 2003, in connection with the
            Second Notes, the Company issued warrants to the lenders to purchase
            up to 1,334,000 shares of common stock at an exercise price of
            $0.8075 per share (See Note 6).

            Information with respect to common stock purchase warrants issued is
            summarized as follows:


                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                   WEIGHTED AVERAGE
                                                       WARRANTS     EXERCISE PRICE
                                                     -----------    --------------
<S>                                                   <C>             <C>
          Balance, December 31, 2002                  21,792,078      $     2.61
              Warrants Issued                          1,334,000            0.81
              Warrants Expired                        (1,933,451)           2.59
              Warrants Exercised                        (100,000)           0.50
                                                      ----------      ----------
          Warrants Exercisable at March 31, 2003      21,092,627      $     2.23
                                                      ==========
</TABLE>

            In order to maintain TVG's rights in acquiring 51% of the Youbet,
            the Company is obligated to issue additional warrants to TVG upon
            the exercise of any stock options or warrants, or if the Company
            issues any additional securities. (See Note 4)

            Additional information about outstanding warrants to purchase the
            Company's common stock at March 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                                    WARRANTS OUTSTANDING AND EXERCISABLE
                                          -------------------------------------------------------
                                                               WEIGHTED AVG.           WEIGHTED
                                                                 REMAINING             AVERAGE
                                               NUMBER         CONTRACTUAL LIFE         EXERCISE
                                             OF SHARES          (IN YEARS)             PRICE
                                          ---------------     -----------------       -----------
<S>                                       <C>                 <C>                      <C>
          RANGE OF EXERCISE PRICES:
               $0.001 - $0.50                    656,499            4.07                $    0.50
               $0.8075                         2,397,100            1.01                     0.81
               $1.09                           1,200,000            5.00                     1.09
               $2.50                          16,592,028            1.07                     2.50
               $3.125 - 5.25                      22,000      Not determinable               3.84
               $7.93 - 19.50                     225,000            1.10                    14.33
                                            ------------                                ---------
                    TOTAL                     21,092,627                                $    2.23
                                            ============                                =========
</TABLE>

      STOCK OPTION ARRANGEMENTS

            As of December 31, 2002, under the 1998 Stock Option Plan, there
            were 6,523,858 stock options granted out of a total approved amount
            of 8,500,000.

      ISSUANCE OF STOCK OPTIONS

            During the three months ended March 31, 2003, the Company granted
            various stock options, as follows:

                  |X|   Stock options were granted to employees to purchase
                        150,700 shares of common stock at exercise prices
                        ranging from $0.77 to $1.90, the fair market value at
                        the date of grant. These options vest over four years,
                        and are exercisable for a period of five years.

                  |X|   Stock options were granted to a non-employee Director to
                        purchase 40,000 shares of common stock at an exercise
                        price of $0.74, the fair market value on the date of the
                        grant. These options vest ratably over a 12 month period
                        and are exercisable for a period of ten years.

                                       14
<PAGE>

                  |X|   Stock options were granted to an ex-director to purchase
                        13,334 shares of common stock at an exercise price of
                        $0.68, below the market value at the date of grant which
                        was $1.50. These options were granted to correct a prior
                        award. They vest immediately and are exercisable for a
                        period of one year.

            Information with respect to activity under the Company's Stock
            Option Plans is summarized below.

<TABLE>
<CAPTION>
                                                                                   WEIGHTED AVERAGE
                                                                STOCK OPTIONS       EXERCISE PRICE
                                                                -------------       --------------
<S>                                                             <C>                <C>
          BALANCE, DECEMBER 31, 2002                               6,598,075           $ 0.99
              Options Granted                                        204,034             1.27
              Options Exercised                                     (289,539)            0.70
              Options Cancelled                                       (1,124)            0.94
              Options Forfeited                                      (86,568)            4.22
                                                                  ----------           ------
          BALANCE, MARCH 31, 2003                                  6,424,878             0.80
                                                                  ==========
          OPTIONS EXERCISABLE (VESTED) AT MARCH 31, 2003           4,863,845           $ 0.93
                                                                  ==========
</TABLE>

            Additional information about outstanding options to purchase the
            Company's common stock at March 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                                -------------------------------------------------- -------------------------------
                                                WEIGHTED AVERAGE
                                                    REMAINING         WEIGHTED                        WEIGHTED
              RANGE OF EXERCISE   NUMBER OF     CONTRACTUAL LIFE      AVERAGE        NUMBER OF         AVERAGE
                   PRICES           SHARES         (IN YEARS)      EXERCISE PRICE      SHARES      EXERCISE PRICE
             -----------------------------------------------------------------------------------------------------
<S>                              <C>            <C>                <C>              <C>            <C>
             $0.01 - $0.99        5,336,605        7.16                $ 0.62        3,834,047         $ 0.64
             $1.00 - 2.00           756,449        4.71                  1.05          702,974           1.05
             $2.50                  234,500        1.44                  2.50          234,500           2.50
             $2.63 - 3.88            34,824        2.56                  3.09           34,824           3.09

             $5.31 - 6.13            62,500        4.06                  5.48           57,500           5.44
                                ------------                                       ------------
                    TOTAL         6,424,878        6.63                $ 0.80        4,863,845         $ 0.93
                                ============                                       ============
</TABLE>

            On August 1, 2001, the Board of Directors approved an option
            repricing plan whereby each current non-executive employees'
            previously issued stock options at a strike price above $1.00, were
            repriced to the then current market price of the common stock
            ($1.00). The Board of Directors believed that many of the stock
            options previously granted by the Company no longer provided the
            performance incentive intended by the option because the exercise
            price of many of the Company's outstanding stock options was well in
            excess of the market price of the common stock. Pursuant to the
            repricing plan, 378,774 options were repriced to $1.00. Each
            repriced option retained its expiration date and vesting schedule.


                                       15
<PAGE>

            As of December 31, 2002, the Company had one stock-based employee
            compensation plan, The 1998 Stock Option Plan. The Company accounts
            for stock options issued to officers and employees under the
            recognition and measurement principles of APB Opinion No. 25,
            Accounting for Stock Issued to Employees, and related
            interpretations. No stock-based employee compensation cost is
            reflected in net income, as all options granted under the plan had
            an exercise price equal to the market value of the underlying common
            stock on the date of grant. Options granted to outside directors and
            consultants are accounted for in accordance with Statement of
            Financial Accounting Standards No. 123.

            If compensation expense for stock options issued to officers and
            employees had been determined based upon the fair value at the grant
            date consistent with the methodology prescribed under Statement of
            Financial Accounting Standards No. 123, the net loss and basic loss
            per share would have been as shown below. The fair value of stock
            options granted under the Company's Plans was estimated on the date
            of grant using the Black-Scholes option pricing model using the
            following weighted average assumptions:

<TABLE>
<CAPTION>
                                          THREE MOS.
                                        ENDED 3/31/03       2002            2001
                                        -------------       ----            ----
<S>                                       <C>             <C>            <C>
          Expected Life in Years             6.1             8.6             6.3
          Risk Free Interest Rate            5.0%            5.2%            5.2%
          Dividend Yield                       0%              0%              0%
          Expected Volatility               73.3%          109.5%          135.8%
</TABLE>

            The weighted average fair value at the date of grant for stock
            options and warrants granted during the three months ended March 31,
            2003 was $0.98 per option and $0.75 per warrant.

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                 MARCH 31, 2003
                                                                  -----------
<S>                                                            <C>
          AS REPORTED NET LOSS                                    $(1,247,679)
              Add:  Stock-based employee compensation
              expense included in reported income, net
              of related tax effects                                       --
              Less:  Total stock based employee
              compensation expense determined under fair
              value based methods for all awards, net of
              related tax effects                                      (7,191)
                                                                  -----------
          PRO FORMA NET LOSS                                      $(1,254,870)
                                                                  ===========

          NET LOSS PER SHARE:
              As Reported                                         $     (0.05)
              Pro Forma                                           $     (0.05)
</TABLE>


NOTE 10: LEGAL PROCEEDINGS

            Youbet currently and from time to time is involved in litigations
            arising in the ordinary course of its business. Youbet can give no
            assurance that the resolution of any particular claim or


                                       16

<PAGE>

            proceeding would not have a material adverse effect on its results
            of operations, cash flows, or financial condition.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      FORWARD LOOKING STATEMENTS

            The following discussion and analysis of Youbet's financial
            condition and results of operations should be read in conjunction
            with Youbet's Consolidated Financial Statements and other financial
            information included herein. This Management's Discussion and
            Analysis or Plan of Operation and other sections of this report
            contain forward-looking statements that are based on the current
            beliefs and expectations of the Company's management, as well as
            assumptions made by, and information currently available to, the
            Company's management. Such statements include those regarding
            general economic and e-gaming industry trends. Because such
            statements involve risks and uncertainties, actual actions and
            strategies and the timing and expected results thereof may differ
            materially from those expressed or implied by such forward-looking
            statements, and the Company's future results, performance or
            achievements could differ materially from those expressed in, or
            implied by, any such forward-looking statements. Future events and
            actual results could differ materially from those set forth in or
            underlying the forward-looking statements.

            This Quarterly Report on Form 10-QSB for the three months ended
            March 31, 2003 contains "forward-looking" statements within the
            meaning of the Federal securities laws. These forward-looking
            statements involve a number of risks and uncertainties, including
            the timely development and market acceptance of products and
            technologies, successful integration of acquisitions, the ability to
            secure additional sources of financing, the ability to reduce
            operating expense and other factors described in the Company's
            filing with the Securities and Exchange Commission. The actual
            results that the Company achieves may differ materially from any
            forward-looking statements due to such risks and uncertainties. The
            forward-looking statements in this Quarterly Report on Form 10-QSB
            for the three months ended March 31, 2003 are subject to risks and
            uncertainties that could cause actual results to differ materially
            from those results expressed in or implied by the statements
            contained herein.

      OVERVIEW

            Youbet.com, Inc. ("Youbet.com", "Youbet", or the "Company") has
            established itself as a leading, global brand name for online, live
            event sports entertainment and wagering. Wagering on live events,
            such as horse racing, car racing, soccer, football, and other
            sporting events is a large global industry which adapts well to the
            Internet. The Company has focused on the United States horse race
            wagering market through its main product, Youbet ExpressSM, which
            features online wagering, simulcast, and in-depth, up-to-the-minute
            information on horse racing. The Company is working to expand the
            Youbet.com brand, its products, and its services throughout the
            United States and select international markets. The Company
            currently provides its customers with the ability to receive
            interactive, real-time audio/video broadcasts directly into their
            computers, access a comprehensive database of handicapping
            information and, in most states, wager on a wide selection of U.S.,
            Canadian, and Australian horse races.


                                       17
<PAGE>

            In 2002, greater than 80% of all United States horse race wagers
            were placed through an off-track facility. Off-track wagering is
            typically captured through inter-track simulcasts, off-track betting
            (OTB) facilities, telephone-based live operator and interactive
            voice recognition (IVR), and PC-based and wireless transmissions.
            This dramatic shift from at-the-track to off-track wagering was
            driven by racing enthusiasts' desire for convenient, remote access
            to a wide range of horse racing events, the ability to deliver this
            service through developments in electronic systems, and the
            relatively new concept of advance deposit wagering ("ADW"). ADW is
            accomplished when a customer opens an account with a state-licensed
            entity and then deposits funds into that account for future
            wagering. Customers may then use their funds plus any realized
            winnings for on-going wagering.

            Pari-mutuel racetrack operators typically retain a portion of all
            wagers as their commission prior to distributing payoffs to the
            winners. In accordance with the TVG and Magna Agreements (see Notes
            4 and 5) and various agreements with independent racetracks, Youbet
            receives a pre-arranged fee from each racetrack for wagers delivered
            to their respective pari-mutuel pools. In the aggregate, these fees
            represent Youbet's primary revenue stream. The Company expects the
            majority of its future revenues to be in the form of fees from
            wagering. Additional revenues are generated from monthly
            subscription fees and the sale of handicapping information. Youbet
            also expects additional future revenues from advertising at the
            Youbet ExpressSM website, advertising on live simulcasts, and the
            sale of sports information and merchandise.

            Youbet has incurred significant losses since inception, and as of
            March 31, 2003, had an accumulated deficit of $89,091,710. Included
            in this accumulated deficit is $25,738,003 in non-cash expenses
            related to (1) the amortization of the fair value of warrants
            issued, (2) the expense of stock options exercised, (3) the
            conversion into common stock and warrants of discounts on bridge
            loans, accounts payable, and employee deferred salaries, and (4) the
            release of forfeiture provisions on certain shares of common stock.
            The recognition of these non-cash expenses did not affect working
            capital or cash flows. The Company does not expect these types of
            costs to continue at these levels.

            Management believes that its ongoing efforts to reduce costs and
            operate more efficiently, combined with the growth of its Oregon
            wagering hub and the receipt of licensing from California in
            February 2002, has improved working capital to a level needed to
            support future operations. However, the Company may from time to
            time require additional capital to fund operations, reduce its
            liabilities, and fund its expansion plans consistent with the
            Company's anticipated changes in operations and infrastructure.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2002

      Revenues increased 321% to $11,006,407 for the quarter ended March 31,
      2003 as compared to $2,617,215 in the first quarter of 2002. The Company
      experienced growth in its customer base with 49,450 active customer
      accounts as of March 31, 2003 as compared to 28,567 as of March 31, 2002.
      Gross handle grew substantially from $27,093,842 for the first quarter
      2002, to $60,996,241 for the most recent quarter with record-breaking
      gross handle of $21,112,703 in March 2003. These results were primarily
      due to (1) an increase in wagering activity at the Company's Oregon
      wagering hub, (2) customer account growth (3) increased awareness of
      Youbet in the horse racing industry due to co-marketing agreements with
      Churchill Downs,


                                       18
<PAGE>


      Maryland Jockey Club, Hollywood Park, and the California Authority of
      Racing Affairs, and (4) enhancements in Web content and functionality.

      The Company records gross proceeds from its wholly-owned subsidiary,
      Youbet Oregon, Inc., as revenues and records the related costs as fees.
      The Company also recognizes as revenue net fees earned on wagers generated
      at third party wagering facilities ("Magna").

      OPERATING EXPENSES

            TRACK FEES: Track Fees increased to $5,853,827 in 2003, as compared
            to $457,000 in 2002. The increase was primarily due to an increase
            in handle and revenues. Track Fees consist of amounts paid and
            payable to various tracks, the California Horse Racing Board, and
            the Oregon Racing Commission.

            LICENSING FEES - RELATED PARTY: Licensing Fees - Related Party
            represents amounts paid and payable as a result of the agreement
            with TVG (See Note 4). For the three months ended March 31, 2003,
            Licensing Fees - Related Party increased to $1,323,835 as compared
            to $439,037 in 2002 primarily due to increased wagering on TVG
            tracks.

            NETWORK OPERATIONS: Network Operations decreased 11% to $438,902 in
            2003, as compared to $491,935 in 2002. The decrease was primarily
            due to lower telecommunication costs. Network Operations consist of
            costs for salaries, data center management, and telecommunications.

            RESEARCH AND DEVELOPMENT: Research and Development increased 2% to
            $500,181 in 2003, as compared to $489,383 in 2002. The Company will
            continue to invest in the development of its network infrastructure
            which management believes to be necessary in achieving its strategic
            objectives.

            SALES AND MARKETING: Sales and Marketing decreased 56% to $257,533
            in 2003, as compared to $584,079 in 2002. The decrease was primarily
            due to reduced expenses associated with marketing programs,
            salaries, and commissions.

            GENERAL AND ADMINISTRATIVE: General and Administrative increased 30%
            to $2,167,129 in 2003 as compared to $1,663,570 in 2002. The
            increase was primarily due to an increase in salaries, stock-based
            compensation, and administrative expenses. General and
            Administrative consists primarily of salaries, benefits, insurances,
            facilities expenses, legal, accounting, and investor relations.

            DEPRECIATION AND AMORTIZATION: Depreciation and Amortization
            decreased 1% to $1,384,260 in 2003 as compared to $1,398,796 in
            2002. Depreciation and Amortization primarily consists of
            amortization of licensing rights related to the TVG Agreement (See
            Note 4).


                                       19
<PAGE>

      OTHER INCOME (EXPENSE)

            INTEREST INCOME: Interest Income decreased 47% to $8,786 in 2003 as
            compared to $16,464 in 2002. The decrease was primarily due to lower
            balances of cash in banks and lower interest rates in 2003 as
            compared to 2002.

            INTEREST EXPENSE: Interest Expense increased to $395,150 in 2003 as
            compared to $5,407 in 2002. The increase was primarily due to (1)
            expense associated with the reissuance of Series C and M Warrants
            and (2) accrued interest on newly issued unsecured notes and
            amortization of the note discount (See Note 6).

            OTHER INCOME: Other Income represents the write-off of $57,945
            related to the settlement of a disputed invoice with a vendor.

LIQUIDITY AND CAPITAL RESOURCES

      The Company has financed its operations primarily through the sale of its
      securities, convertible debt, and private debt placements. At March 31,
      2003, the Company had net working capital of $274,530 compared to a net
      working capital deficit of $2,267,997 at December 31, 2002. The Company
      incurred net losses from operations for the quarter ended March 31, 2003
      and year ended December 31, 2002. As of March 31, 2003, the Company had
      $5,136,182 in cash and cash equivalents and $2,633,217 in restricted cash.
      The Company's principal recurring cash commitments consist of payroll and
      benefits, business insurance, and real estate leases. Management believes
      that its ongoing efforts to reduce costs and operate more efficiently,
      combined with the growth of its Oregon wagering hub and revenues resulting
      from the receipt of licensing from California in February 2002, has
      improved cash flow to a level needed to support future operations.
      However, the Company may from time to time seek additional capital to fund
      operations, reduce its liabilities, and fund its expansion plans
      consistent with the Company's anticipated changes in operations and
      infrastructure.

      The Company entered into a Securities Purchase Agreement on March 21,
      2002, whereby the Company issued one-year secured notes (the "Notes") in
      the aggregate principal amount of $750,000 at an interest rate of 12% to
      the Company's new Chairman of the Board and Chief Executive Officer, and
      to seven other investors for their $750,000 investment in the Company. On
      January 24, 2003, the Notes were retired ahead of schedule and $80,137 for
      all accrued interest through February 8, 2003, was paid. In connection
      with issuance of the Notes, the Company issued five-year warrants to
      purchase 750,000 shares of the Company's common stock at an exercise price
      of $0.50 per share. The warrants expire five years from the issuance date
      and contain certain registration rights and cashless exercise feature.
      Using the Black-Scholes model, the Company recorded the fair value of the
      warrants issued, $437,137, as a note discount and were amortized over one
      year as interest expense. On January 24, 2003, the Notes were retired
      ahead of schedule and $80,137 for all accrued interest through February 8,
      2003, was paid.

      The Company entered into a second Securities Purchase Agreement on
      February 11, 2003, whereby the Company issued two-year unsecured notes
      (the "Second Notes") in the aggregate principal amount of $2,000,000 at an
      interest rate of 10% to several investors (the "Investors"). Interest is
      accrued monthly and paid quarterly; principal is due on February 11, 2005.
      In addition to the issuance of the Second Notes, the Company agreed to
      cause the


                                       20
<PAGE>

      assignment to the Investors of a portion of warrants previously issued by
      the Company. In this connection, holders of the Company's C and M warrants
      (the "Holders") were offered the opportunity to assign a portion of their
      warrants to the investors on the following basis: (a) the per share
      exercise price of warrants held by the Holders would be reduced to $.8075;
      (b) the term of the warrants would be extended to February 11, 2005; and
      (c) the number of warrant shares retained by the Holders would be reduced
      to 20% of the warrant shares that were currently issuable pursuant to the
      exercise of the warrants (the "Retained Warrant Shares"). The warrant
      shares other than the Retained Warrant Shares would be either cancelled by
      the Company or assigned to the Investors. As of April 4, 2003, warrants to
      acquire 693,194 shares of the Company's Common Stock were cancelled, the
      number of Retained Warrant Shares was 2,034,963 and warrants to purchase
      an aggregate of 1,334,000 shares were assigned to the Investors at an
      exercise price of $0.8075 per share (representing a discount of 15% from
      the closing market price of the Company's Common Stock of $0.95 on the
      date of the Securities Purchase Agreement). Using the Black-Scholes model,
      the Company recorded the fair value of the warrants assigned, $518,223, as
      a note discount to be amortized over two years as interest expense.
      Accumulated amortization of discount on the Second Notes was $33,661 as of
      March 31, 2003.

      Net cash used in operating activities was $484,727 and $1,238,003 for the
      three months ended March 31, 2003 and 2002. The decrease in 2003 from 2002
      in cash used in operating activities of $753,276 was primarily due to (1)
      a increase in non-cash interest expense of $131,468, (2) an increase in
      accounts receivable of $397,038, (3) an increase in accrued expenses of
      $676,229, and (4) an increase in deposits of $499,999. These changes were
      partially offset by (1) a decrease in fees payable - related parties of
      $934,131, and (2) a decrease in accounts payable - track related of
      $1,443,230.

      Net cash used in investing activities was $442,152 and $34,677 for the
      three months ended March 31, 2003 and 2002, respectively. The increase in
      2003 from 2002 in cash used in investing activities of $407,475 was
      primarily due to (1) an increase in purchases of property and equipment of
      $125,679, and (2) an increase in restricted cash of $281,796.

      Net cash provided by financing activities was $1,503,164 and $750,000 for
      the three months ended March 31, 2003 and 2002, respectively. The increase
      of $753,164 in 2003 from 2002 in cash provided by financing activities was
      primarily due to proceeds from a second notes payable of $2,000,000 plus
      proceeds from the exercise of stock options and warrants of $253,164
      offset by payment of a prior note payable of $750,000.

ITEM 3. CONTROLS AND PROCEDURES

            (a)   Evaluation of Disclosure Controls and Procedures

                  Disclosure controls and procedures are designed to ensure that
                  information required to be disclosed in the reports filed or
                  submitted under the Exchange Act is recorded, processed,
                  summarized and reported, within the time periods specified in
                  the SEC's rules and forms. Disclosure controls and procedures
                  include, without limitation, controls and procedures designed
                  to ensure that information required to be disclosed in the
                  reports filed under the Exchange Act is accumulated and
                  communicated to management, including the Chief Executive
                  Officer and Chief


                                       21
<PAGE>

                  Financial Officer, as appropriate, to allow timely decisions
                  regarding required disclosure.

                  Within the 90 days prior to the filing of this report, the
                  Company carried out an evaluation, under the supervision and
                  with the participation of the Company's management, including
                  the Company's Chief Executive Officer and Chief Financial
                  Officer, of the effectiveness of the design and operation of
                  the Company's disclosure controls and procedures. Based upon
                  and as of the date of that evaluation, the Chief Executive
                  Officer and Chief Financial Officer concluded that the
                  Company's disclosure controls and procedures are effective to
                  ensure that the information required to be disclosed in the
                  reports the Company files and submits under the exchange act
                  is recorded, processed, summarized and reported as and when
                  required.

            (b)   Changes in Internal Controls

                  There were no changes in the Company's internal controls or in
                  other factors that could have significantly affected those
                  controls subsequent to the date of the Company's most recent
                  evaluation.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      Youbet currently and from time to time is involved in litigations arising
      in the ordinary course of its business. Youbet can give no assurance that
      the resolution of any particular claim or proceeding would not have a
      material adverse effect on its results of operations, cash flows, or
      financial condition.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      All securities described below were issued under an exemption to the
      registration requirements of the Securities Act of 1933, as amended,
      pursuant to Section 4(2) thereof and Regulation D.

      ISSUANCE OF STOCK OPTIONS

            During the three months ended March 31, 2003, the Company granted
            various stock options, as follows:

                  |X|   Stock options were granted to employees to purchase
                        150,700 shares of common stock at exercise prices
                        ranging from $0.77 to $1.90, the fair market value at
                        the date of grant. These options vest over four years,
                        and are exercisable for a period of five years.

                  |X|   Stock options were granted to a non-employee Director to
                        purchase 40,000 shares of common stock at an exercise
                        price of $0.74, the fair market value on the date of the
                        grant. These options vest ratably over a 12 month period
                        and are exercisable for a period of ten years. Issuance
                        of Warrants


                                       22
<PAGE>

            During the three months ended March 31, 2003, in connection with the
            Second Notes, the Company issued warrants to the lenders to purchase
            up to 1,334,000 shares of common stock at an exercise price of
            $0.8075 per share (See Note 6).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of Youbet.com's stockholders during
      the fiscal quarter ended March 31, 2003.

ITEM 5. OTHER INFORMATION

      The Company received a letter from the Nasdaq Listing Qualifications Panel
      (the "Panel") stating their decision dated February 19, 2003 whereby the
      Panel determined to continue the listing of Youbet.com, Inc. on The Nasdaq
      SmallCap Market. Specifically, on or before May 20, 2003, the Company was
      required to evidence a closing bid price of at least $1.00 per share and,
      immediately thereafter, a closing bid price of at least $1.00 per share
      for a minimum of ten consecutive trading days. As of the close of business
      on March 31, 2003, the Company demonstrated a closing bid price of $1.75
      per share, and had evidenced a closing bid price of at least $1.00 per
      share for 32 consecutive trading days. Accordingly, the Panel determined
      to continue the listing of the Company's securities on The Nasdaq SmallCap
      Market. The hearing file has been closed.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

            Exhibit 99.1: Certifications Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

      (b)   Reports on Form 8-K

            Form 8-K dated March 6, 2003 relating to the $2,000,000 Private
            Placement Financing dated February 11, 2003


                                       23
<PAGE>


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized,




                                    YOUBET.COM, INC.

     May 15, 2003                   By: /s/   Charles F. Champion
                                        ----------------------------------------
                                        Charles F. Champion
                                        President and Chief Executive Officer

     May 15, 2003                   By: /s/   Gary W. Sproule
                                        ----------------------------------------
                                        Gary W. Sproule
                                        Chief Financial Officer


                                       24
<PAGE>


CERTIFICATIONS

      I, Charles Champion, certify that

      1.    I have reviewed this quarterly report on Form 10-QSB of Youbet.com,
            Inc.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report.

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and we have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c.    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent function):

            d.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            e.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officer and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

            May 15, 2003                 By: /s/ Charles Champion
                                             -----------------------------------
                                             Charles Champion
                                             Chief Executive Officer, President


                                       25
<PAGE>

CERTIFICATIONS

      I, Gary Sproule, certify that

      1.    I have reviewed this quarterly report on Form 10-QSB of Youbet.com,
            Inc.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report.

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and we have:

            f.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            g.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            h.    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent function):

            i.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            j.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officer and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

            May 15, 2003               By: /s/ Gary Sproule
                                           -------------------------------------
                                           Gary Sproule
                                           Chief Financial Officer


                                       26
<PAGE>