##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED
September 30, 2008
 Commission File Number: 0-26015
 YOUBET.COM, INC.
  Delaware
    
    95-4627253(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 5901 De Soto Avenue
Woodland Hills, California 91367
 (818) 668-2100
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



YOUBET.COM, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED
September 30, 2008
 PagePART I. FINANCIAL INFORMATIONItem 1. Condensed consolidated financial statements:Balance sheets as of September 30, 2008 (unaudited) and December 31, 2007
    
    
    2Statements of operations for the three and nine months ended September 30, 2008 and 2007
(unaudited)
    
    
    3Statements of cash flows for the nine months ended September 30, 2008 and 2007 (unaudited)
    
    
    4Notes to unaudited financial statements
    
    
    5Item 2. Managements discussion and analysis of financial condition and results of operations
    
    
    13Item 3. Quantitative and qualitative disclosures about market risk
    
    
    20Item 4. Controls and procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal proceedings
    
    
    21Item 1A. Risk factors
    
    
    21Item 2. Unregistered sales of equity securities and use of proceeds
    
    
    21Item 3. Defaults upon senior securities
    
    
    21Item 4. Submission of matters to a vote of security holders
    
    
    21Item 5. Other information
    
    
    21Item 6. Exhibits
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32.1
  Preliminary Note




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Part I. Financial Information
 
 Item 1. Condensed Consolidated Financial Statements
 YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share amounts)
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    12,532
    
    
    $
    6,551Current portion of restricted cash
    
    
    4,741
    
    
    
    8,635Accounts receivable, net
    
    
    3,512
    
    
    
    7,314Inventories
    
    
    1,951
    
    
    
    2,085Prepaid expenses and other current assets
    
    
    1,140
    
    
    
    1,41723,876
    
    
    
    26,002Property and equipment, net
    
    
    20,992
    
    
    
    24,664Intangibles assets other than goodwill, net
    
    
    5,949
    
    
    
    6,505Goodwill
    
    
    6,859
    
    
    
    6,859Other assets
    
    
    651
    
    
    
    1,020$
    58,327
    
    
    $
    65,050LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    9,561
    
    
    $
    10,390Trade payables
    
    
    6,069
    
    
    
    10,028Accrued expenses
    
    
    11,320
    
    
    
    11,346Customer deposits
    
    
    4,599
    
    
    
    8,326Deferred revenues
    
    
    208
    
    
    
    21231,757
    
    
    
    40,302Long-term debt, net of current portion
    
    
    262
    
    
    
    4,76732,019
    
    
    
    45,069Stockholders equityPreferred stock, $0.001 par value,
authorized 1,000,000 shares, none
outstandingCommon stock, $0.001 par value, authorized 100,000,000 shares,
42,562,805 and 42,562,805 shares issued
    
    
    43
    
    
    
    43Additional paid-in capital
    
    
    135,199
    
    
    
    134,286Accumulated other comprehensive loss
    
    
    (114
    )
    
    
    (56
    )Deficit
    
    
    (106,501
    )
    
    
    (111,973
    )Less treasury stock, 1,043,781 shares at cost
    
    
    (2,319
    )
    
    
    (2,319
    )26,308
    
    
    
    19,981$
    58,327
    
    
    $
    65,050
 The accompanying notes are an integral part of these condensed consolidated financial statements.
  2




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YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
(in thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RevenuesCommissions
    
    $
    22,570
    
    
    $
    25,656
    
    
    $
    62,784
    
    
    $
    73,331Contract revenues
    
    
    5,613
    
    
    
    6,488
    
    
    
    17,076
    
    
    
    18,279Equipment sales
    
    
    340
    
    
    
    287
    
    
    
    837
    
    
    
    801Other
    
    
    795
    
    
    
    961
    
    
    
    2,371
    
    
    
    2,84729,318
    
    
    
    33,392
    
    
    
    83,068
    
    
    
    95,258Costs and expensesTrack fees
    
    
    10,599
    
    
    
    9,774
    
    
    
    29,075
    
    
    
    31,052Licensing fees
    
    
    2,482
    
    
    
    6,991
    
    
    
    6,958
    
    
    
    15,431Network costs
    
    
    985
    
    
    
    1,079
    
    
    
    2,893
    
    
    
    3,516Contract costs
    
    
    3,906
    
    
    
    4,258
    
    
    
    11,302
    
    
    
    12,323Equipment costs
    
    
    159
    
    
    
    189
    
    
    
    389
    
    
    
    39818,131
    
    
    
    22,291
    
    
    
    50,617
    
    
    
    62,720Gross profit
    
    
    11,187
    
    
    
    11,101
    
    
    
    32,451
    
    
    
    32,538Operating expensesGeneral and administrative
    
    
    3,633
    
    
    
    4,342
    
    
    
    12,813
    
    
    
    13,775Sales and marketing
    
    
    1,351
    
    
    
    2,173
    
    
    
    3,753
    
    
    
    7,913Research and development
    
    
    796
    
    
    
    925
    
    
    
    2,592
    
    
    
    2,616Depreciation and amortization, including intangibles
    
    
    2,197
    
    
    
    2,820
    
    
    
    5,975
    
    
    
    6,5877,977
    
    
    
    10,260
    
    
    
    25,133
    
    
    
    30,891Income from continuing operations before other income (expense) and income
tax (benefit)
    
    
    3,210
    
    
    
    841
    
    
    
    7,318
    
    
    
    1,647Other income (expense)Interest income
    
    
    52
    
    
    
    168
    
    
    
    169
    
    
    
    552Interest expense
    
    
    (275
    )
    
    
    (391
    )
    
    
    (947
    )
    
    
    (1,410
    )Other
    
    
    101
    
    
    
    30
    
    
    
    37
    
    
    
    49Income from continuing operations before income tax (benefit)
    
    
    3,088
    
    
    
    648
    
    
    
    6,577
    
    
    
    838Income tax (benefit)
    
    
    286
    
    
    
    (59
    )
    
    
    362
    
    
    
    (307
    )Net income from continuing operations
    
    
    2,802
    
    
    
    707
    
    
    
    6,215
    
    
    
    1,145Discontinued operationsIncome (loss) from discontinued operations, without
tax effect
    
    
    (120
    )
    
    
    (640
    )
    
    
    (743
    )
    
    
    150Net income
    
    $
    2,682
    
    
    $
    67
    
    
    $
    5,472
    
    
    $
    1,295Basic income (loss) per shareIncome from continuing operations
    
    $
    0.07
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.03Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    0.00Net income per common share
    
    
    0.06
    
    
    
    0.00
    
    
    
    0.13
    
    
    
    0.03Diluted income (loss) per shareIncome from continuing operations
    
    $
    0.07
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.03Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    0.00Net income per common share
    
    
    0.06
    
    
    
    0.00
    
    
    
    0.13
    
    
    
    0.03Weighted average shares outstandingBasic
    
    
    41,519,024
    
    
    
    41,897,638
    
    
    
    41,519,024
    
    
    
    41,882,566Diluted
    
    
    42,405,151
    
    
    
    42,529,450
    
    
    
    42,171,337
    
    
    
    42,805,805
 The accompanying notes are an integral part of these condensed consolidated financial statements.
  3




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YOUBET.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
(in thousands)
 Nine Months EndedSeptember 30,2008
    
    
    2007Operating activitiesNet income
    
    $
    5,472
    
    
    $
    1,295Income (loss) from discontinued operations
    
    
    (743
    )
    
    
    150Income from continuing operations
    
    
    6,215
    
    
    
    1,145Adjustments to reconcile income from continuing operations
to net cash provided by operating activities, continuing operationsDepreciation and amortization of property and equipment
    
    
    5,419
    
    
    
    5,960Amortization of intangibles
    
    
    556
    
    
    
    627Stock-based compensation
    
    
    913
    
    
    
    660Provision for doubtful accounts receivables
    
    
    477
    
    
    
    1,105Increase in operating (assets) and liabilities
    
    
    3,673
    
    
    
    (4,156
    )Net cash provided by operating activities,
continuing operations
    
    
    17,253
    
    
    
    5,341Investing activitiesPurchase of property and equipment
    
    
    (1,098
    )
    
    
    (2,452
    )Cash paid for United Tote Company (make-whole)
    
    
    
    
    
    
    (4,473
    )Increase in restricted cash (other than Players TrustSM)
    
    
    (5
    )
    
    
    (168
    )Cash paid for IRG acquisition earn-out
    
    
    
    
    
    
    (3,106
    )Other
    
    
    34Net cash used in investing activities
    
    
    (1,069
    )
    
    
    (10,199
    )Financing activitiesProceeds from exercise of stock options and warrants
    
    
    
    
    
    
    352Proceeds from debt
    
    
    630
    
    
    
    2,894Repayment of debt
    
    
    (6,743
    )
    
    
    (8,512
    )Proceeds from sale-leaseback transaction
    
    
    
    
    
    
    1,065Repurchase of common stock
    
    
    
    
    
    
    (1,002
    )Other
    
    
    
    
    
    
    (88
    )Net cash used in financing activities
    
    
    (6,113
    )
    
    
    (5,291
    )Net cash provided by (used in) operating activities, discontinued operations
    
    
    (4,032
    )
    
    
    213Foreign currency translation adjustments
    
    
    (58
    )
    
    
    31Net increase (decrease) in cash and cash equivalents
    
    
    5,981
    
    
    
    (9,905
    )Cash and cash equivalents at the beginning of period
    
    
    6,551
    
    
    
    21,051Cash and cash equivalents at the end of period
    
    $
    12,532
    
    
    $
    11,146
 The accompanying notes are an integral part of these condensed consolidated financial statements.
  4




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YOUBET.COM, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2008
 Note 1: Basis of Presentation
  wholly-owned wholly-owned
  Note 2: Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net income from continuing operations
    
    $
    2,802
    
    
    $
    707
    
    
    $
    6,215
    
    
    $
    1,145Denominator:Basic weighted average shares outstanding
    
    
    41,519
    
    
    
    41,898
    
    
    
    41,519
    
    
    
    41,883Effect of dilutive stock options
    
    
    886
    
    
    
    631
    
    
    
    652
    
    
    
    923Diluted weighted average shares outstanding
    
    
    42,405
    
    
    
    42,529
    
    
    
    42,171
    
    
    
    42,806Earnings per share  basic
    
    $
    0.07
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.03Earnings per share  diluted
    
    $
    0.07
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.03
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Note 3: Detail of Selected Balance Sheet Accounts
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)(in thousands)Accounts receivable, netTrack receivables
    
    $
    3,722
    
    
    $
    7,964Player receivable
    
    
    16
    
    
    
    60Other
    
    
    285
    
    
    
    2,6964,023
    
    
    
    10,720Less: allowance for doubtful accounts
    
    
    (511
    )
    
    
    (3,406
    )$
    3,512
    
    
    $
    7,314InventoryTotalizator components
    
    $
    1,651
    
    
    $
    1,477Ticket stock
    
    
    300
    
    
    
    608$
    1,951
    
    
    $
    2,085Property and equipment, netPari-mutual equipment
    
    $
    22,345
    
    
    $
    21,966Computer equipment
    
    
    15,012
    
    
    
    14,520Computer equpment under capital lease
    
    
    2,053
    
    
    
    1,605Software
    
    
    4,554
    
    
    
    4,347Leasehold improvements
    
    
    3,190
    
    
    
    3,201Office furniture, fixtures and equipment
    
    
    576
    
    
    
    66347,730
    
    
    
    46,302Less: accumulated depreciation
    
    
    (26,738
    )
    
    
    (21,638
    )$
    20,992
    
    
    $
    24,664Intangibles assets other than goodwill, netIntangibles, other than goodwill
    
    $
    7,925
    
    
    $
    10,274Less: accumulated amortization
    
    
    (1,976
    )
    
    
    (3,769
    )$
    5,949
    
    
    $
    6,505
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Note 4: Debt
  September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)(in thousands)Promissory notes
    
    $
    3,200
    
    
    $
    3,200Bank term loan
    
    
    5,750
    
    
    
    10,958Capital lease obligations and other
    
    
    873
    
    
    
    9999,823
    
    
    
    15,157Less: short-term debt and current portion of long-term debt
    
    
    9,561
    
    
    
    10,390Long-term debt, less current maturities
    
    $
    262
    
    
    $
    4,767
    
    
    change the maturity date to January 31, 2009;
    
    eliminate the Companys option to have its interest rate determined by reference to
LIBOR;
    
    provide for additional payments on principal of $1.0 million each on the date of the
amendment, July 1, 2008 and September 1, 2008, respectively, and $0.5 million on December
1, 2008;
    
    set the prime rate margin at 1.50%;
    
    modify the definition of EBITDA and the adjustments to EBITDA for purposes of the
credit facility; and
    
    amend the minimum EBITDA level and leverage ratio the Company is required to maintain.
    7




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Note 5: Income Taxes
      8




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Note 6: Litigation and Contingencies
       9




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Note 7: Stockholders Equity
   WeightedAverageStock
    
    
    OptionOptions
    
    
    Price(in thousands)Balance at January 1, 2008
    
    
    4,717
    
    
    $
    2.70Options granted
    
    
    2,071
    
    
    
    1.47Options exercisedOptions cancelled
    
    
    (1,429
    )
    
    
    3.39Balance at September 30, 2008
    
    
    5,359
    
    
    $
    2.04
  Options Outstanding
    
    
    Options ExercisableWeightedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageNumber of Shares
    
    
    Exercise
    
    
    Contractual
    
    
    Number of Shares
    
    
    Exercise(in thousands)
    
    
    Price
    
    
    Life (years)
    
    
    (in thousands)
    
    
    PriceRange of Exercise Prices:$0.50 to $0.68
    
    
    870
    
    
    $
    0.53
    
    
    
    3.67
    
    
    
    870
    
    
    $
    0.53$1.22 to $1.95
    
    
    2,060
    
    
    
    1.47
    
    
    
    7.53
    
    
    
    235
    
    
    
    1.41$2.23 to $2.74
    
    
    1,439
    
    
    
    2.35
    
    
    
    5.97
    
    
    
    1,255
    
    
    
    2.33$3.04 to $3.92
    
    
    455
    
    
    
    3.63
    
    
    
    7.71
    
    
    
    177
    
    
    
    3.52$4.00 to $4.91
    
    
    452
    
    
    
    4.37
    
    
    
    5.65
    
    
    
    370
    
    
    
    4.37$5.03 to $5.62
    
    
    83
    
    
    
    5.32
    
    
    
    6.61
    
    
    
    70
    
    
    
    5.33Total at September 30, 2008
    
    
    5,359
    
    
    
    2.04
    
    
    
    6.33
    
    
    
    2,977
    
    
    
    2.13
 Note 8: Segment Reporting
   10




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(unaudited, in thousands)2008
    
    
    2007
    
    
    2008
    
    
    2007RevenueAdvance deposit wagering
segment
    
    $
    23,365
    
    
    $
    26,617
    
    
    $
    65,154
    
    
    $
    76,178Totalizator services segment
    
    
    6,297
    
    
    
    7,167
    
    
    
    18,861
    
    
    
    20,01929,662
    
    
    
    33,784
    
    
    
    84,015
    
    
    
    96,197Intersegment eliminations
    
    
    (344
    )
    
    
    (392
    )
    
    
    (947
    )
    
    
    (939
    )$
    29,318
    
    
    $
    33,392
    
    
    $
    83,068
    
    
    $
    95,258Revenue by Geographic AreaUnited States
    
    $
    28,643
    
    
    $
    32,675
    
    
    $
    82,018
    
    
    $
    94,251International
    
    
    675
    
    
    
    717
    
    
    
    1,050
    
    
    
    1,007$
    29,318
    
    
    $
    33,392
    
    
    $
    83,068
    
    
    $
    95,258Reconciliation to Income
Before Income Tax Expense or
BenefitIncome (loss) from operations,
before other income (expense)
and income tax (benefit)Advance deposit wagering
segment
    
    $
    3,688
    
    
    $
    1,363
    
    
    $
    8,611
    
    
    $
    3,215Totalizator service segment
    
    
    (478
    )
    
    
    (522
    )
    
    
    (1,293
    )
    
    
    (1,568
    )3,210
    
    
    
    841
    
    
    
    7,318
    
    
    
    1,647Interest income
    
    
    52
    
    
    
    168
    
    
    
    169
    
    
    
    552Interest expense
    
    
    (275
    )
    
    
    (391
    )
    
    
    (947
    )
    
    
    (1,410
    )Other
    
    
    101
    
    
    
    30
    
    
    
    37
    
    
    
    49Income (loss) before income
tax (benefit) from
continuing operations
    
    
    3,088
    
    
    
    648
    
    
    
    6,577
    
    
    
    838Income (loss) before income
tax (benefit) from
discontinued operations
    
    
    (120
    )
    
    
    (640
    )
    
    
    (743
    )
    
    
    150Income (loss) before income
tax (benefit)
    
    $
    2,968
    
    
    $
    8
    
    
    $
    5,834
    
    
    $
    988Capital Spending,includes
capital leases (non-cash)Advance deposit wagering
segment
    
    $
    476
    
    
    $
    410
    
    
    $
    1,369
    
    
    $
    828Totalizator services segment
    
    
    323
    
    
    
    224
    
    
    
    508
    
    
    
    1,934$
    799
    
    
    $
    634
    
    
    $
    1,877
    
    
    $
    2,762Depreciation and AmortizationAdvance
deposit wagering segment
    
    $
    405
    
    
    $
    986
    
    
    $
    1,234
    
    
    $
    1,936Totalizator services segment
    
    
    1,792
    
    
    
    1,834
    
    
    
    4,741
    
    
    
    4,651$
    2,197
    
    
    $
    2,820
    
    
    $
    5,975
    
    
    $
    6,587
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)(in thousands)Total AssetsAdvance deposit wagering segment
    
    $
    22,619
    
    
    $
    23,617Totalizator services segment
    
    
    35,708
    
    
    
    41,433$
    58,327
    
    
    $
    65,050
  11




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Note 9: Impairment of Intangibles and Goodwill
    Note 10: Discontinued Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2007Revenues
    
    $
    190
    
    
    $
    561Cost of revenues
    
    
    94
    
    
    
    269Gross profit
    
    
    96
    
    
    
    292Operating expenses
    
    
    640
    
    
    
    1,056Net loss
    
    $
    (544
    )
    
    $
    (764
    )Impact on the Companys
earning (loss) per share:- Basic
    
    $
    (0.01
    )
    
    $
    (0.02
    )- Diluted
    
    $
    (0.01
    )
    
    $
    (0.02
    )
  12




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three-month nine-month
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    
    
    
    $
    4,845
    
    
    $
    46
    
    
    $
    15,381Cost of Revenues
    
    
    (3
    )
    
    
    3,640
    
    
    
    75
    
    
    
    11,224Gross profit (loss)
    
    
    3
    
    
    
    1,205
    
    
    
    (29
    )
    
    
    4,157Operating expenses
    
    
    123
    
    
    
    1,301
    
    
    
    714
    
    
    
    3,243Net loss
    
    $
    (120
    )
    
    $
    (96
    )
    
    $
    (743
    )
    
    $
    914Impact on the Companys
earning (loss) per share:- Basic
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    0.02- Diluted
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    0.02
 
 Item 2. Managements discussion and analysis of financial condition and results of operations
 Forward-looking statements
 forward-looking forward-looking
 Overview
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www.youbet.com
      Critical accounting estimates and policies
   14




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Recent Accounting Pronouncements
 Fair Value Measurements. The Fair Value Option for Financial
Assets and Financial Liabilities  including an amendment of FAS No. 115.
 Business Combinations.
 Noncontrolling Interests in Consolidated
Financial Statements-An Amendment of ARB No. 51.
 Disclosures About Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
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Results of continuing operations for the three months ended September 30, 2008 compared to the
three months ended September 30, 2007
 Revenues
    Operating expenses
 Track fees
 Licensing fees
 Network costs
 Contract costs
  16




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Research and development
 Sales and marketing
 General and administrative
 Depreciation and amortization
 Interest expense (income)
 Other income
 Income taxes
 Results of continuing operations for the nine months ended September 30, 2008 compared to the nine
months ended September 30, 2007
 Revenues
 nine-month
    17




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##### Table of Contents



Operating expenses
 Track fees
 Licensing fees
 Network costs
 Contract costs
 Research and development
 Sales and marketing
 General and administrative
 Depreciation and amortization
 Interest expense
 Income taxes
  18




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Liquidity and capital resources
 pre-pay
        19




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Item 3. Quantitative and qualitative disclosures about market risk
   20




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Item 4. Controls and procedures
  .
 
 Part II. Other information
 
 Item 1. Legal proceedings
 Form 10-Q.
 
 Item 1A. Risk factors
  
 Item 2. Unregistered sales of equity securities and use of proceeds
  
 Item 3. Defaults upon senior securities
  
 Item 4. Submission of matters to a vote of security holders
  
 Item 5. Other information
   21




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Item 6. Exhibits
 3.1
    
    
    Certificate of Incorporation of Youbet.com, as amended (incorporated by
reference to Exhibit 3.1 to Youbets Form 10-Q SB for the quarter ended
September 30, 2003).3.2
    
    
    Amended and Restated Bylaws of Youbet.com, as amended (incorporated by
reference to Exhibit 3.1 to Youbets Current Report on Form 8-K filed April 20,
2007).31.1
    
    
    Certification of President and Chief Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.31.2
    
    
    Certification of Chief Financial Officer and Treasurer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.32.1
    
    
    Certification Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.
 
 SIGNATURES
  YOUBET.COM, INC.November 10, 2008
    By:
    /s/ Michael BrodskyMichael BrodskyChief Executive OfficerNovember 10, 2008
    By:
    /s/ James A. BurkJames A. BurkChief Financial Officer  22