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

                                   -----------

                                   Form 10-QSB





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

      FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       OR

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

         FOR THE TRANSITION PERIOD FROM _____ TO_____

                       COMMISSION FILE NUMBER: 33-13789LA

                                   -----------

                                YOUBET.COM, INC.

             (Exact name of registrant as specified in its charter)

            DELAWARE                                   95-4627253
     (State of incorporation)               (I.R.S. Employer Identification No.)



                      5901 De Soto Avenue, Woodland Hills,
                     California 91367 (Address of principal
                     executive offices, including zip code)

                                 (818) 668-2100
                (Issuer's telephone number, including area code)

                                   -----------

 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 November 12, 2002, the issuer had 23,422,600 shares of
                      common stock issued and outstanding.



<PAGE>



                                YOUBET.COM, INC.
                              INDEX TO FORM 10-QSB
                              FOR THE QUARTER ENDED
                               SEPTEMBER 30, 2002

<TABLE>
<CAPTION>


                                                                                                                 Page
<C>                                                                                                             <C>
PART I.      FINANCIAL INFORMATION

   Item 1.   Financial Statements
                Consolidated Balance Sheets as of September 30, 2002 (unaudited)
                and December 31, 2001 3 Consolidated Statements of Operations
                for the three months ended September 30, 2002
                     and September 30, 2001 (unaudited)                                                           4
                Consolidated Statements of Operations for the nine months ended September 30, 2002
                     and September 30, 2001 (unaudited)                                                           5
                Consolidated Statements of Cash Flows for the nine months ended September 30, 2002
                     and September 30, 2001 (unaudited)                                                           6
                Notes to Unaudited Condensed Consolidated Financial Statements                                    7
   Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations               13
   Item 3.   Controls and Procedures                                                                             17


PART II.     OTHER INFORMATION

   Item 1.   Legal Proceedings                                                                                   17
   Item 2.   Changes in Securities and Use of Proceeds                                                           18
   Item 3.   Defaults Upon Senior Securities                                                                     18
   Item 4.   Submission of Matters to a Vote of Security Holders                                                 18
   Item 5.   Other Information                                                                                   18
   Item 6.   Exhibits and Reports on Form 8-K                                                                    19
   Signatures                                                                                                    21
   Certifications                                                                                                22
   Exhibit 10.1: Second Amendment to Employment Agreement for Charles F. Champion                                22
   Exhibit 10.2: Employment Agreement for Michael J. Veitch                                                      25
   Exhibit 99.1: Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                        33

</TABLE>




                                       2
<PAGE>


Part I. Financial Information
Item 1. Financial Statements

                                                     YOUBET.COM, INC.
                                               CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               September 30, 2002      December 31, 2001
                                                                             ----------------------- ----------------------
                                                                                  (Unaudited)              (Audited)

ASSETS

  Current Assets:
<S>                                                                               <C>                       <C>
     Cash and Cash Equivalents                                                    $       5,617,960         $     3,560,740
     Restricted Cash, Current Portion (Note 2)                                              680,841                107,867
     Receivables (Note 3)                                                                   768,127                278,235
     Interest and Other Receivables                                                               -                 59,468
     Prepaid Expenses                                                                       444,715                433,636
     Other Current Assets                                                                    25,946                      -
                                                                             ----------------------- ----------------------
Total Current Assets                                                                      7,537,589              4,439,946
                                                                             ----------------------- ----------------------
Property and Equipment                                                                    9,874,031              9,846,011
     Less: Accumulated Depreciation and Amortization                                     (5,446,808)            (3,966,710)
                                                                             ----------------------- ----------------------
Property and Equipment, net                                                               4,427,223              5,879,301
                                                                             ----------------------- ----------------------
Licensing Rights, net (Note 4)                                                            5,926,676              8,638,213
Restricted Cash, net of current portion (Note 2)                                            812,938                812,938
Deposits (Note 5)                                                                           870,464                115,175
                                                                             ----------------------- ----------------------
 Total Assets                                                                     $      19,574,890         $    19,885,573
                                                                             ======================= ======================

LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities:
     Accounts Payable - Trade                                                     $       1,143,829         $    1,158,638
     Fees Payable to Related Party (Note 4)                                               1,988,737                255,127
     Accounts Payable - Track Related (Note 4)                                            3,903,457                213,823
     Interest Payable - Notes (Note 6)                                                       47,465                      -
     Accrued Expenses                                                                       909,623              1,302,106
     Customer Deposits                                                                    1,307,358                361,500
     Accrued Compensation and Related Items (Note 7)                                        378,377                335,113
     Deferred Revenues                                                                        7,657                  8,097
     Notes Payable, (face $750,000, net of unamortized discount of $207,091                 542,909                      -
         (Note 6)
                                                                             ----------------------- ----------------------
Total Current Liabilities                                                           $    10,229,412        $     3,634,404
                                                                             ----------------------- ----------------------
Total Liabilities                                                                   $    10,229,412        $     3,634,404

Stockholders' Equity:
     Preferred Stock, $.001 par value - Authorized 1,000,000 shares,
     none outstanding                                                                             -                      -
     Common Stock, $.001 par value - Authorized 100,000,000 shares, 19,537,950
     and 23,422,600 shares outstanding as of
     December 31, 2001 and as of September 30, 2002, respectively.                           23,422                 19,538
     Additional Paid-in Capital                                                          95,779,246             95,084,423
     Accumulated Deficit                                                                (86,457,190)           (78,852,792)
                                                                             ----------------------- ----------------------
Total Stockholders' Equity                                                           $    9,345,478        $    16,251,169
                                                                             ----------------------- ----------------------
Total Liabilities and Stockholders' Equity                                          $    19,574,890        $    19,885,573
                                                                             ======================= ======================
</TABLE>


                  See accompanying notes to unaudited condensed
                       consolidated financial statements.

                                       3
<PAGE>




                                YOUBET.COM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                               Three Months Ended September 30,
                                                                        ------------------------------------------------
                                                                                 2002                     2001
                                                                        ------------------------ -----------------------

<S>                                                                                 <C>                      <C>
Revenues                                                                            $ 8,127,764              $1,129,925

Operating Expenses:
Track Fees                                                                            3,301,788                  93,155
Licensing Fees - Related Party (Note 4)                                               1,849,626                       -
Network Operations                                                                      472,444                 632,782
Research and Development                                                                443,357                 709,796
Sales and Marketing                                                                     793,075               1,019,093
General and Administrative                                                            2,000,738               1,639,943
Depreciation and Amortization                                                         1,396,568                 816,608
                                                                        ------------------------ -----------------------
Total Operating Expenses                                                             10,257,596               4,911,377
                                                                        ------------------------ -----------------------

Loss from Operations                                                                $(2,129,832)         $   (3,781,452)

Other Income (Expense):
Interest Income                                                                     $     9,218          $       61,953
Interest Expense                                                                       (139,230)                 (8,814)
Other                                                                                   127,008                      84
                                                                        ------------------------ -----------------------
 Total Other Income (Expense)                                                             (3,004)                 53,223
                                                                        ------------------------ -----------------------
      Net Loss                                                                      $(2,132,836)         $   (3,728,229)
                                                                        ======================== =======================
Basic and Diluted:
     Net Loss per Common Share                                                           $(0.11)         $        (0.19)
                                                                        ======================== =======================
     Weighted average number of common shares outstanding                            20,047,412              19,522,523
                                                                        ======================== =======================
</TABLE>




                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       4
<PAGE>




                                YOUBET.COM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                Nine Months Ended September 30,
                                                                        -------------------------------------------------
                                                                                 2002                     2001
                                                                        ------------------------ ------------------------

<S>                                                                                 <C>                                <C>
Revenues                                                                            $16,755,862                        $4,494,851

Operating Expenses:
Track Fees                                                                            5,380,752                  242,117
Licensing Fees - Related Party (Note 4)                                               3,630,334                        -
Network Operations                                                                    1,463,806                2,012,376
Research and Development                                                              1,468,508                2,132,326
Sales and Marketing                                                                   2,656,603                3,491,778
General and Administrative                                                            5,434,539                4,331,032
Depreciation and Amortization                                                         4,195,472                1,933,949
                                                                        ------------------------ ------------------------
Total Operating Expenses                                                             24,230,014               14,143,578
                                                                        ------------------------ ------------------------

Loss from Operations                                                                $(7,474,152)           $  (9,648,727)

Other Income (Expense):
Interest Income                                                                     $    32,591            $     344,795
Interest Expense                                                                       (289,472)                 (21,023)
Other                                                                                   126,635                   (2,203)
                                                                        ------------------------ ------------------------
Total Other Income                                                                     (130,246)                 321,569
                                                                        ------------------------ ------------------------

    Net Loss                                                                     $   (7,604,398)           $  (9,327,158)
                                                                        ======================== ========================

Basic and Diluted:
   Net Loss per Common Share                                                     $        (0.38)           $       (0.48)
                                                                        ======================== ========================

    Weighted average number of common shares outstanding                             19,879,458               19,521,414
                                                                        ======================== ========================
</TABLE>




                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       5
<PAGE>




<TABLE>
<CAPTION>

                                YOUBET.COM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                                                                  Nine Months Ended September 30,
                                                                        -----------------------------------------------
                                                                                  2002                    2001
                                                                        ----------------------- -----------------------
<S>                                                                          <C>                    <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash Flows From Operating Activities:
   Net Loss .......................................................          $ (7,604,398)          $ (9,327,158)
Adjustments to Reconcile Net Loss to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization .....................................             4,195,472              1,933,949
Non-Cash Interest Expense..........................................               230,046                    --
Non-Cash Compensation .............................................               257,686                661,253
Change in Operating Assets and Liabilities:
Receivables .......................................................              (489,892)               272,217
Interest and Other Receivables.....................................                59,468                    --
Prepaid Expenses ..................................................               (11,079)                (3,061)
Other Current Assets ..............................................               (25,946)                39,019
Deposits ..........................................................              (755,289)                64,717
Accounts Payable - Trade ..........................................               (14,809)              (285,425)
Fees - Related Party ..............................................             1,733,610                   --
Accounts Payable - Tracks .........................................             3,689,634                   --
Interest Payable - Notes ..........................................                47,465                   --
Customer Deposits .................................................               945,858                107,191
Accrued Compensation and Related Items ............................                43,264               (503,153)
Accrued Expenses ..................................................              (392,483)               404,143
Gain (Loss) on Disposal of Assets .................................                (1,937)                 2,536
Deferred Revenues .................................................                  (440)                 1,752
                                                                             ------------           ------------
 Net Cash Provided By (Used In) Operating Activities ..............          $  1,906,230           $ (6,630,520)
                                                                             ------------           ------------

Cash Flows From Investing Activities:
Restricted Cash ...................................................              (572,974)               107,867
Proceeds from Sale of Assets ......................................                 4,016                   --
Purchase of Intangibles ...........................................             2,711,537                   --
Purchases of Property and Equipment ...............................            (2,745,473)              (580,570)
                                                                             ------------           ------------
Net Cash Provided By (Used In) Investing Activities ...............          $   (602,894)          $   (472,703)
                                                                             ------------           ------------

Cash flows from financing activities:
Proceeds from Notes Payable .......................................               750,000                   --
Payments on Capitalized Lease Obligations .........................                  --                   (8,909)
Proceeds from Exercise of Stock Options and Warrants ..............                 3,884                 11,799
                                                                             ------------           ------------
Net Cash Provided By (Used In) Financing Activities ...............          $    753,884           $      2,890
                                                                             ------------           ------------

Net Increase (Decrease) In Cash and Cash Equivalents ..............             2,057,220             (7,100,333)
Cash and Cash Equivalents at the Beginning of the Period ..........             3,560,740             12,094,172
                                                                             ------------           ------------
Cash and Cash Equivalents at the End of the Period ................          $  5,617,960           $  4,993,839
                                                                             ============           ============
Supplemental Disclosure of Cash Flow Information:
   Cash Paid for Interest .........................................          $       --             $     18,487
                                                                             ============           ============
Non-Cash Investing and Financing Activities:
   Non-Cash Compensation ..........................................          $    257,686           $    661,253

   Issuance of Warrants for Licensing Rights ......................                  --                9,964,357
   Fair Value of Warrants Issued for Financing Costs ..............          $    437,137           $       --
                                                                             ============           ============
</TABLE>
                  See accompanying notes to unaudited condensed
                       consolidated financial statements.
                                       6
<PAGE>


                                YOUBET.COM, INC.
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      NINE MONTHS ENDED SEPTEMBER 30, 2002

NOTE 1-ORGANIZATION AND BASIS OF PRESENTATION

BUSINESS

     Youbet.com, Inc. ("Youbet.com" 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 space. The Company has focused on the United States horse race
wagering market through its main product, Youbet Express(C), which features
online wagering and in-depth, up-to-the-minute information on horse racing. The
Company is focused on expanding the Youbet.com brand, its products, and its
services throughout the United States and select international market. 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.

     The Company strives for innovation in the online, live event wagering
industry and continues to aggressively pursue U.S. and international markets.
Future developments include enhancements to its existing products and
technologies, development of new products, and expansion of international
initiatives. Recent developments include improved website appearance, enhanced
audio/video feeds with samples, online account statements, personal mailbox,
diagnostic system tests, and discount pricing on Daily Racing Form packages.

     On February 21, 2002, Youbet.com received a license from the California
Horse Racing Board authorizing the Company to accept on-line and telephone
pari-mutuel wagers from California residents processed through the Company's
Oregon hub. The Company also accepts and processes wagers through another
licensed wagering entity owned by Magna Entertainment, Corporation, ("Magna").

GOING CONCERN

     The accompanying unaudited consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates the realization of sufficient assets and the satisfaction of
liabilities in the normal course of business. The Company has sustained
significant recurring operating losses and may require additional funds to
accomplish its objectives. The Company believes that its ongoing efforts to
build market share, reduce costs, and operate more efficiently will continue to
increase cash flows. However, the Company may require additional capital for
ongoing operations and future initiatives. The Company is exploring various
alternatives to raise additional capital, but there can be no assurances that it
will be successful in this regard. To the extent that the Company is unable to
secure the capital necessary on a timely basis and/or under acceptable terms and
conditions, the Company may not have sufficient cash resources to maintain
operations. In such event, the Company may be required to consider a formal or
informal restructuring or reorganization. No adjustments have been made to the
unaudited consolidated financial statements that might result from the outcome
of this uncertainty.

BASIS OF PRESENTATION

     In the opinion of management, the accompanying unaudited condensed
consolidated financial statements for the three and nine months ended September
30, 2002 and 2001 include all adjustments (consisting of normal recurring
accruals) which management considers necessary to present fairly the financial
position of the Company as of September 30, 2002, the results of its operations
for the three and nine months ended September 30, 2002 and September 30, 2001,
and its cash flows for the nine months ended September 30, 2002 and September
30, 2001 in conformity with generally accepted accounting principles ("GAAP").
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, 2001, as filed with the Securities and Exchange Commission on
April 14, 2002, and should be read in conjunction with this Quarterly Report on

                                       7
<PAGE>



     Form 10-QSB. The results of operations for the three and nine months ended
September 30, 2002 are not necessarily indicative of the consolidated results of
operations to be expected for the full fiscal year ending December 31, 2002.
Certain information and footnote disclosures normally included in the financial
statements presented in accordance with GAAP have been condensed or omitted.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles 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. Total warrants outstanding were 22,170,382 with
exercise prices between $0.10 to $19.50 and total stock options outstanding were
6,410,493 with exercise prices between $0.26 and $10.50.

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 September 30, 2002, and December 31, 2001, the
Company had uninsured cash and cash equivalents and restricted cash of
$6,190,905 and $4,481,545, respectively.

RECLASSIFICATIONS

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


NOTE 2-RESTRICTED CASH, CURRENT PORTION

OBLIGATIONS UNDER FACILITIES LEASES

     Youbet.com's executive and operating offices occupy approximately 30,000
square feet and are located at 5901 De Soto Avenue, Woodland Hills, California
under a lease that expires March 15, 2010. The base term of the lease is ten
years with an option to extend an additional five years. Base rent payments are
currently $61,880 per month with annual increases as specified in the lease
agreement. Upon entering into this lease agreement, the Company obtained a
one-year $1,029,000 letter of credit secured by cash. The Company is obligated
for the next ten years to obtain a letter of credit equal to the original amount
of $1,029,000 less $107,867 per year for every year elapsed during the first
five years and less $97,867 per year for every year elapsed thereafter. As of
December 31, 2001, Youbet.com had posted a letter of credit in the amount of
$920,805, which was classified as restricted cash in the Company's accompanying
audited consolidated financial statements. The Company did not renew the letter
of credit when it expired on March 28, 2002, and as such, the landlord drew
$920,805 against the letter of credit and is holding the funds as a deposit. The
entire $920,805 is considered to be restricted cash with $107,867 recorded as
current and $812,938 recorded as long term.

     In accordance with the lease agreement, management expects to have a new
letter of credit posted in the amount of $812,938 by December 31, 2002. Upon
posting of the letter of credit, the landlord will refund the aforementioned
deposit to the Company.

     On July 1, 2001, the Company entered into a three year lease agreement for
its Oregon facility. Base rent payments are $2,103 per month with annual
increases as specified in the lease agreement.

                                       8
<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. These reserves amounted to $572,974 as of
September 30, 2002, all of which were recorded in current assets as restricted
cash.


NOTE 3-RECEIVABLES

     Receivables of $768,127 primarily consist of (1) $498,000 due from Magna
Entertainment Corporation for fees earned on handle generated through Magna's
Call-A-Bet system, and (2) $158,000 due from various tracks for settlement of
wagers processed through the Company's Oregon hub.


NOTE 4-AGREEMENT WITH TVG

     In May 2001, Youbet.com entered into a track content and patent license
agreement (the "License Agreement") and a warrant issuance agreement (the
"Warrant Agreement") with ODS Technologies, L.P., dba TVG. These agreements
relate to the grant by TVG to Youbet.com 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 race tracks to accept
wagers based on such content, and to use TVG's patented systems for making
online pari-mutuel wagers on horse races. Among other things, the agreements
call for Youbet.com, 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.com 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.com 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.com 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 subject of the legal action; and (c)
by either Youbet.com 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.com under the License
Agreement, Youbet.com has agreed to pay to TVG fees based on the handle
generated by Youbet.com from wagering activity and to issue to TVG the warrants
to purchase Youbet.com common stock on the terms and conditions set forth in the
Warrant Issuance Agreement, as described below (see "Competition"). The TVG fees
are as follows:

o    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 only. 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.com network.

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

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

                                       9
<PAGE>



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

o    At such time as Youbet.com opens its own account wagering facility, with
     respect to wagers accepted or processed through an account wagering
     facility other than Magna, Youbet.com 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.com, 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.

o    Commencing with the opening of Youbet.com's own account wagering facility,
     with respect to account wagers processed through Magna, Youbet.com 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.com 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.com is permitted to modify or waive
     transaction fees for certain customers, provided that it shares any such
     fees from such customers equally with TVG.

o    Commencing with the first calendar quarter in which Youbet.com 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.

o    With respect to account wagers on races conducted at the TVG Exclusive
     Tracks from Youbet.com 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.

o    With respect to account wagers on races conducted at the TVG Exclusive
     Tracks from Youbet.com customers in other states, (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.

o    With respect to account wagers on races conducted at non-TVG Exclusive
     Tracks from Youbet.com customers with an account address within a 25-mile
     radius of any TVG Exclusive Track, Youbet.com 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.com'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.com 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
     model, as a deferred asset captioned "Licensing Rights" and is being
     amortized over three years, the estimated life of the Company's technology.
     Accumulated amortization as of September 30, 2002 was $1,318,859. The
     Initial TVG Warrant was exercised during the quarter ended June 30, 2002,
     resulting in cash proceeds of $3,885 to the Company.

     The Company issued to TVG the Additional TVG Warrant on September 20, 2001
     (the time the Warrant Agreement was approved by the stockholders) entitling
     TVG to purchase 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 Warrant Shares, is
     equal to 51% of the sum of (i) the total number of shares of Youbet.com
     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
     ($7,054,229), using the Black-Scholes model, as a deferred asset captioned
     "Licensing Rights" and is being amortized over thirty two
                                       10
<PAGE>
     months, the estimated life of the Company's technology. Accumulated
     amortization as of September 30, 2002 was $2,718,822. 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.com 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.

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

2002    $ 3,615,383
2003    $ 3,615,383
2004    $ 1,380,065


NOTE 5-DEPOSITS

     Deposits of $870,464 primarily consist of (1) $500,000 deposit for
licensing with the California Horse Racing Board, (2) $250,000 deposit for
licensing with the Oregon Racing Commission, and (3) $60,078 security deposit
for the Company's Woodland Hills office.


NOTE 6-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, the Chief Executive Officer, and to six other investors
for their $750,000 investment in the Company. Both principal and all interest
accrued on these Notes will be payable at the earlier of (a) one-year from the
date of issuance, or (b) upon the Company's completion of funding in an amount
greater than $2,000,000, excluding the Notes, in any ninety-day period prior to
the maturity of the Note. Accrued interest payable was $47,465 as of September
30, 2002.

     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 Company recorded the fair value of the warrants
issued of $437,137 using the Black-Scholes model, as a note discount and is
being amortized over one year as interest expense. Accumulated amortization of
discount on notes payable was $230,046 as of September 30, 2002.


NOTE 7-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 September 30, 2002, the Company had accrued a total of
$150,000 ($75,000 to each of Messrs. Marshall and Fine).

     On February 1, 2002, the Company signed service agreements through January
31, 2004, with David Marshall and Lawrence Lucas (through their respective
wholly-owned subsidiaries) to be compensated for their services each in the
amount of $220,000 per year. As of September 30, 2002, the Company had accrued a
portion of their compensation in the amount of $64,583 for Mr. Marshall and
$94,583 for Mr. Lucas.

                                       11
<PAGE>
     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 becomes cashflow
positive. As of September 30, 2002, the Company had accrued a total of $11,667.
The Board also approved an employment agreement for Gary Sproule to become the
Company's Chief Financial Officer starting June 2, 2002, through June 1, 2004 at
an annual salary of $200,000 in year one and $225,000 in year two. The Board
also approved an employment agreement for Michael Veitch to become the Company's
Chief Marketing Officer starting September 30, 2002, through October 1, 2004 at
an annual salary of $200,000 in year one and $250,000 in year two.


NOTE 8-STOCKHOLDERS' EQUITY

ISSUANCE OF STOCK OPTIONS

     During the nine months ended September 30, 2002, the Company granted
various stock options, as follows:

(1)  Stock options were granted to employees to purchase 224,744 shares of
     common stock at exercise prices ranging from $0.56 to $0.94, the fair
     market value at the date of grant. These options vest over four years, and
     are exercisable for a period of five years.

(2)  Stock options were granted to executive officers to purchase 1,350,000
     shares of common stock at exercise prices ranging from $0.50 to $0.78. Of
     these options, 400,000 were issued at $0.50, below the market value on the
     date of grant, which was $0.60, and the remaining options were issued at
     the fair market value on the date of grant. These options vest as follows;
     50,000 vest immediately, 100,000 vest in sixty days, 100,000 vest in ninety
     days, 600,000 vest over three years, and 500,000 vest over four years.
     These options are exercisable as follows; 1,050,000 for a period of ten
     years, 100,000 for a period of five years, and 200,000 for a period of
     eighty-one months. On April 11, 2002, 94,900 of these options were
     terminated.

(3)  Stock options were granted to directors to purchase 200,000 shares of
     common stock at exercise prices ranging from $0.50 to $0.80. These options
     were issued at the fair market value at the date of grant and vest monthly
     over one year and are exercisable for a period of ten years.

(4)  Stock options were granted to consultants to purchase 95,002 shares of
     common stock at exercise prices ranging from $0.50 to $0.97. Of these
     options 60,000 were issued at $0.50, below the market value at the date of
     grant, which was $0.67, and the remaining shares were issued at the fair
     market value at the date of grant. The fair value of these options is being
     expensed, with a credit to additional paid-in-capital. These options vest
     as follows: 60,000 vest over three years, 30,000 in twenty-six months,
     2,502 vest in one month, and 2,500 vest in six months. These options are
     exercisable as follows: 60,000 for a period of ten years, and 35,002 for a
     period of five years.


NOTE 9-LEGAL PROCEEDINGS

     On June 4, 1999, a complaint was filed against the Company in the Court of
Chancery of the State of Delaware in and for New Castle County entitled George
Von Opel v. Youbet.com Inc. (C.A. No. 17200 NC). In the complaint Mr. Von Opel
alleges that the Company breached its contractual obligation pursuant to a
Private Placement Memorandum by failing to register the shares of common stock
underlying 400,000 warrants issued by the Company to an affiliate of Mr. Von
Opel. The complaint seeks specific performance of the alleged obligation to
register such shares and damages for alleged breach of contract in the amount of
$8.7 million. The Company has answered the complaint and intends to defend
itself vigorously in the action. On August 19, 1999, Mr. Von Opel moved for
summary judgment on the issue of liability, which on June 2, 2000, the court
denied. The Company is proceeding with discovery and has noticed the deposition
of Mr. Von Opel. A final resolution cannot be predicted at this time.
                                       12
<PAGE>
     The Company received correspondence from the Business Software Alliance
("BSA") alleging the Company had used or installed unauthorized copies of
software products on its computers. In their correspondence, BSA proposed to
settle their claims against the Company for $824,000, based on twice the alleged
value of the unauthorized software installed. On November 1, 2002, the claim was
settled for $228,000 which was $22,000 less than the amount accrued.

     The Company was served with a lawsuit from a vendor claiming nonpayment of
services in the amount of approximately $300,000. The Company filed a counter
claim against the vendor. During April 2002, the Company settled all of the
vendor's claims for $160,000, recognizing approximately $124,000 in gains on
settlement.

     The Company is also a party to certain other claims, actions, and
proceedings incidental to its business, none of which is expected to have a
material adverse effect on the business, financial position or results of
operations of the Company.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FORWARD LOOKING STATEMENTS

     The following discussion of the financial condition and results of
operations of Youbet.com, Inc. should be read in conjunction with the financial
statements and the related notes included elsewhere in this 10-QSB. This
discussion contains 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.

OVERVIEW

     Youbet.com has established itself as one of the leading global brand names
for online live event sports entertainment wagering. The Company has focused its
efforts on the United States horse racing industry and believes the internet is
the ideal medium for live event wagering allowing players instant access to vast
amounts of historical performance data for use in assessing potential wagers.
Electronic mediums also offer the ability to sort and analyze such data in ways
and at speeds that are not manually possible. The technology also allows wagers
to be placed from virtually any location within a jurisdiction where wagering is
legal, freeing players from traditional fixed-location wagering facilities.
Finally, wagers may be placed, acknowledged, and settled in seconds.

     The Company's premium web-based application, Youbet Express(C), provides
up-to-the-minute detailed information on horse races nationwide including live
simulcast of most races streamed directly into the customer's computer. Wagers
are placed by using the website's icon-driven menus to fill out electronic
betting tickets which are then electronically transmitted to a licensed account
wagering entity. The customer's account is debited, the wager is placed at the
host horse track, and electronic confirmation is sent to the customer. The
entire process is nearly instantaneous. The post-race adjustment to the
customer's account also occurs just seconds after official results are announced
at the racetrack. To compliment Youbet Express(C), a state-of-the-art phone
wagering system was launched in September 2001.

     The Company's revenue is generated through fees on wagers placed at
Youbet.com and the sale of handicapping information. Beginning December 1, 2002,
the Company will be offering two subscription plans. Customers who come to
Youbet.com exclusively for the audio/video content may choose unlimited access
for $14.95 per month or limited access (10 hours per month) for $7.95 per month.
Discounts will be applied based on wagering activity with all fees waived for
high-end customers.

                                       13
<PAGE>
CONSOLIDATED RESULTS OF OPERATIONS-THREE MONTHS ENDED SEPTEMBER 30, 2002
COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2001

     Revenues increased 619% to $8,127,764 in 2002 as compared to $1,129,925 in
2001. The Company experienced solid growth in its customer base with 44,134
active customer accounts as of September 30, 2002, as compared to 15,803 as of
September 30, 2001. Gross handle grew substantially from $18,808,000 for the
third quarter 2001, to $46,341,000 for the most recent quarter with
record-breaking gross handle of $16,700,000 in August 2002. These results were
primarily due to (1) an increase in wagering activity at the Company's Oregon
wagering hub, (2) new co-marketing agreements with Churchill Downs, Maryland
Jockey Club, Hollywood Park, and the California Authority of Racing Affairs, and
(3) 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 and Sales and
Marketing. The Company also recognizes as revenue net fees earned on wagers
generated at third party wagering facilities ("Magna").


OPERATING EXPENSES

NETWORK OPERATIONS: Network Operations decreased 25% to $472,444 in 2002, as
compared to $632,782 in 2001. The decrease was primarily due to lower salaries
expense related to reductions in staff. Network Operations consist of costs for
salaries, data center management, and telecommunications.

RESEARCH AND DEVELOPMENT: Research and Development decreased 38% to $443,357 in
2002, as compared to $709,796 in 2001. The decrease was primarily due to lower
salaries expense related to reductions in staff. The Company will continue to
invest in the development of its network infrastructure which management
believes to be necessary in achieving its strategic objectives.

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 September 30, 2002, Licensing Fees - Related Party were
$1,849,626.

TRACK FEES: Track Fees increased to $3,301,788 in 2002, as compared to $93,155
in 2001. The increase was primarily due to the opening of the Oregon wagering
hub in September 2001. Track Fees consist of amounts paid and payable to various
tracks, the California Horse Racing Board, and the Oregon Racing Commission.

SALES AND MARKETING: Sales and Marketing decreased 22% to $793,075 in 2002, as
compared to $1,019,093 in 2001. The decrease was primarily due to reduced
expenses associated with marketing programs, salaries, and commissions.

GENERAL AND ADMINISTRATIVE: General and Administrative increased 22% to
$2,000,738 in 2002, as compared to $1,639,943 in 2001. The increase was
primarily due to one-time consulting fees to conduct market analyses and to
explore potential revenue streams from subscriptions. General and Administrative
consists primarily of salaries, benefits, insurances, facilities expenses,
legal, accounting, and investor relations.

DEPRECIATION AND AMORTIZATION: Depreciation and Amortization increased 71% to
$1,396,568 in 2002, as compared to $816,608 in 2001. The increase was primarily
due to the amortization of licensing rights (See Note 4).

OTHER INCOME (EXPENSE)

INTEREST INCOME: Interest Income decreased 85% to $9,218 in 2002, as compared to
$61,953 in 2001. The decrease was primarily due to lower balances of cash in
banks and lower interest rates in 2002, as compared to 2001.

                                       14
<PAGE>

INTEREST EXPENSE: Interest Expense increased to $139,230 in 2002, as compared to
$8,814 in 2001. The increase was primarily due to accrued interest on newly
issued secured notes and amortization of the note discount (See Note 6).

OTHER: Other Income (Expense) increased to $127,008 in 2002, as compared to $84
in 2001. The increase was primarily due to a write-off of unsupported, aged
trade payables.


CONSOLIDATED RESULTS OF OPERATIONS-NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 2001

     Revenues increased 272% to $16,755,862 in 2002 as compared to $4,494,851 in
2001. The Company experienced solid growth in its customer base with 44,134
active customer accounts as of September 30, 2002, as compared to 15,803 as of
September 30, 2001. As a result, gross handle grew from $74,704,104 for the nine
months ended September 30, 2001, to $112,970,000 for the nine months ended
September 30, 2002, including a record-breaking gross handle of $16,700,000 in
August 2002. These results were primarily due to (1) an increase in wagering
activity at the Company's Oregon wagering hub, (2) new co-marketing agreements
with Churchill Downs, Maryland Jockey Club, Hollywood Park, and the California
Authority of Racing Affairs, and (3) 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 and Sales and
Marketing. The Company also recognizes as revenue net fees earned on wagers
generated at third party wagering facilities ("Magna").

OPERATING EXPENSES

NETWORK OPERATIONS: Network Operations decreased 27% to $1,463,806 in 2002, as
compared to $2,012,376 in 2001. The decrease was primarily due to lower salaries
expense related to reductions in staff. Network Operations consist of costs for
salaries, data center management, and telecommunications.

RESEARCH AND DEVELOPMENT: Research and Development decreased 31% to $1,468,508
in 2002, as compared to $2,132,326 in 2001. The decrease was primarily due to
lower salaries expense related to reductions in staff. The Company will continue
to invest in the development of its network infrastructure which management
believes to be necessary in achieving its strategic objectives.

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 nine months ended September 30, 2002, Licensing Fees - Related Party were
$3,630,334.

TRACK FEES: Track Fees increased to $5,380,752 in 2002, as compared to $242,117
in 2001. The increase was primarily due to the opening of the Oregon wagering
hub in September 2001. Track Fees consist of amounts paid and payable to various
tracks, the California Horse Racing Board, and the Oregon Racing Commission.

SALES AND MARKETING: Sales and Marketing decreased 24% to $2,656,603 in 2002, as
compared to $3,491,778 in 2001. The decrease was primarily due to reduced
expenses associated with marketing programs, salaries, and commissions.

GENERAL AND ADMINISTRATIVE: General and Administrative increased 25% to
$5,434,539 in 2002, as compared to $4,331,032 in 2001. The increase was
primarily due to one-time consulting fees, non-cash compensation, and various
severance expenses. General and Administrative consists primarily of salaries,
benefits, insurances, facilities expenses, legal, accounting, and investor
relations.

DEPRECIATION AND AMORTIZATION: Depreciation and Amortization increased 117% to
$4,195,472 in 2002, as compared to $1,933,949 in 2001. The increase was
primarily due to the amortization of licensing rights (See Note 4).

                                       15
<PAGE>

OTHER INCOME (EXPENSE)

INTEREST INCOME: Interest Income decreased 91% to $32,591 in 2002, as compared
to $344,795 in 2001. The decrease was primarily due to lower balances of cash in
banks and lower interest rates in 2002, as compared to 2001.

INTEREST EXPENSE: Interest Expense increased to $289,472 in 2002, as compared to
$21,023 in 2001. The increase was primarily due to accrued interest on newly
issued secured notes and amortization of the note discount (See Note 6).

OTHER: Other Income (Expense) increased to $126,635 in 2002 as compared to
$(2,203) in 2001. The increase was primarily due to a write-off of unsupported,
aged trade payables.


LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its operations primarily through the sale of its
securities and convertible debt. Since it was formed, Youbet.com has incurred
only negative cash flow from operations. At September 30, 2002, the Company had
$5,617,960 in cash and cash equivalents and $1,493,779 in restricted cash. The
Company's principal recurring cash commitments consist of payroll and benefits,
business insurance, and real estate leases.

     At September 30, 2002, the Company had negative net working capital of
$2,691,823 compared to positive net working capital of $805,542 at December 31,
2001. The Company incurred net losses from operations for the years ended
December 31, 2001, 2000, and 1999, and for the nine months ended September 30,
2002, and needs to raise additional funds to accomplish its objectives. The
Company's independent certified public accountants have included an explanatory
paragraph in their report for the year ended December 31, 2001, which indicates
there is substantial doubt about the Company's ability to continue as a going
concern. (See Note 1 to the unaudited consolidated financial statements for
additional information).

     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, the Chief Executive Officer, and to six other investors
for their $750,000 investment in the Company. Both principal and all interest
accrued on these Notes will be payable at the earlier of (a) one-year from the
date of issuance, or (b) upon the Company's completion of funding in an amount
greater than $2,000,000, excluding the Notes, in any ninety-day period prior to
the maturity of the Note. 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.

     Net cash provided by operating activities was $1,906,230 compared to
$6,630,520 used in operations for the nine months ended September 30, 2002, and
2001, respectively. The increase in 2002 from 2001 in cash provided by operating
activities of $8,536,750 was primarily due to (1) a decrease in net loss before
depreciation and amortization of $3,984,283, (2) an increase in customer
deposits of $945,858, (3) an increase in accrued expenses - related party, of
$1,733,610, and (4) an increase in accrued expenses - track related of
$3,689,634, and (5) an increase in accrued compensation of $43,264. These
changes were partially offset by (1) a decrease in deposits of $863,185, (2) a
decrease in receivables, prepaids, and other current assets totaling $467,449,
and (3) a decrease in accounts payable - trade of $14,809.

     Net cash used in investing activities was $602,894 and $472,703 for the
nine months ended September 30, 2002, and 2001, respectively. The increase in
2002 from 2001 in cash used in investing activities of $130,191 was primarily
due to an increase in restricted cash of $680,841 offset by a decrease in
purchases of intangibles and property, plant, and equipment of $546,634.

     Net cash provided by financing activities was $753,884 and $2,890 for the
nine months ended September 30, 2002, and 2001, respectively. The increase of
$750,994 from 2001 in cash provided by financing activities was primarily due to
$750,000 in proceeds from notes payable which is fully described in Note 6 to
the accompanying unaudited consolidated financial statements.

                                       16
<PAGE>



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The majority of the Company's cash equivalents consist of cash in bank
accounts and money markets. The Company does not believe it has significant
market risk exposure with regard to its financial instruments. The Company has
notes payable with a 12% fixed interest rate.


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 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

     On June 4, 1999, a complaint was filed against the Company in the Court of
Chancery of the State of Delaware in and for New Castle County entitled George
Von Opel v. Youbet.com Inc. (C.A. No. 17200 NC). In the complaint Mr. Von Opel
alleges that the Company breached its contractual obligation pursuant to a
Private Placement Memorandum by failing to register the shares of common stock
underlying 400,000 warrants issued by the Company to an affiliate of Mr. Von
Opel. The complaint seeks specific performance of the alleged obligation to
register such shares and damages for alleged breach of contract in the amount of
$8.7 million. The Company has answered the complaint and intends to defend
itself vigorously in the action. On August 19, 1999, Mr. Von Opel moved for
summary judgment on the issue of liability, which on June 2, 2000, the court
denied. The Company is proceeding with discovery and has noticed the deposition
of Mr. Von Opel. A final resolution cannot be predicted at this time.

     The Company received correspondence from the Business Software Alliance
("BSA") alleging the Company had used or installed unauthorized copies of
software products on its computers. In their correspondence, BSA proposed to
settle their claims against the Company for $824,000, based on twice the alleged
value of the unauthorized software installed. On November 1, 2002, the claim was
settled for $228,000 which was $22,000 less than the amount accrued.

                                       17
<PAGE>



     The Company was served with a lawsuit from a vendor claiming nonpayment of
services in the amount of approximately $300,000. The Company filed a counter
claim against the vendor. During April 2002, the Company settled all of the
vendor's claims for $160,000, recognizing approximately $124,000 in gains on
settlement.

     The Company is also a party to certain other claims, actions, and
proceedings incidental to its business, none of which is expected to have a
material adverse effect on the business, financial position or results of
operations of the Company.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

ISSUANCE OF STOCK OPTIONS

     During the nine months ended September 30, 2002, the Company granted
various stock options, as follows:

     (1)  Stock options were granted to employees to purchase 224,744 shares of
          common stock at exercise prices ranging from $0.56 to $0.94, the fair
          market value at the date of grant. These options vest over four years,
          and are exercisable for a period of five years.

     (2)  Stock options were granted to executive officers to purchase 1,350,000
          shares of common stock at exercise prices ranging from $0.50 to $0.78.
          Of these options, 400,000 were issued at $0.50, below the market value
          on the date of grant, which was $0.60, and the remaining options were
          issued at the fair market value on the date of grant. These options
          vest as follows; 50,000 vest immediately, 100,000 vest in sixty days,
          100,000 vest in ninety days, 600,000 vest over three years, and
          500,000 vest over four years. These options are exercisable as
          follows; 1,050,000 for a period of ten years, 100,000 for a period of
          five years, and 200,000 for a period of eighty-one months. On April
          11, 2002, 94,900 of these options were terminated.

     (3)  Stock options were granted to directors to purchase 200,000 shares of
          common stock at exercise prices ranging from $0.50 to $0.80. These
          options were issued at the fair market value at the date of grant and
          vest monthly over one year and are exercisable for a period of ten
          years.

     (4)  Stock options were granted to consultants to purchase 95,002 shares of
          common stock at exercise prices ranging from $0.50 to $0.97. Of these
          options 60,000 were issued at $0.50, below the market value at the
          date of grant, which was $0.67, and the remaining shares were issued
          at the fair market value at the date of grant. The fair value of these
          options is being expensed, with a credit to additional
          paid-in-capital. These options vest as follows; 60,000 vest over three
          years, 30,000 in twenty-six months, 2,502 vest in one month, and 2,500
          vest in six months. These options are exercisable as follows; 60,000
          for a period of ten years, and 35,002 for a period of five years.


ISSUANCE OF WARRANTS

     During the three months ended March 31, 2002, in connection with the Notes
Payable financing, the Company issued warrants to the lenders to purchase up to
750,000 of common stock (See Note 5).


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

               None.


                                       18
<PAGE>



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
third quarter of the fiscal year ending December 31, 2002.


ITEM 5. OTHER INFORMATION

     Youbet.com has received a determination from the Nasdaq Listing
Qualifications Panel regarding its request for continued inclusion on the Nasdaq
National Market. The Panel has denied Youbet.com's request and the listing of
the Company's common stock was transfered from The Nasdaq National Market to The
Nasdaq SmallCap Market effective at the start of trading on August 9, 2002. The
panel noted that the Company appears to satisfy all requirements for continued
listing on The Nasdaq SmallCap Market with the exception of the $1.00 bid price
requirement. The Company was granted a 180-day extension through February 10,
2003, to satisfy the bid requirement. In the event the Company is unable to
achieve a closing bid price of at least $1.00 per share for a minimum of 10
consecutive trading days by such date, or fails to comply with any of the terms
of the exception, its securities will be delisted from The Nasdaq Stock Market.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (A)  EXHIBITS

          EXHIBIT 10.1: SECOND AMENDMENT TO EMPLOYMENT AGREEMENT FOR CHARLES F.
          CHAMPION

          EXHIBIT 10.2: EMPLOYMENT AGREEMENT FOR MICHAEL J. VEITCH

          EXHIBIT 99.1: CERTIFICATIONS PURSUANT TO SECTION 906 OF THE
          SARBANES-OXLEY ACT OF 2002


     (B)  REPORTS ON FORM 8-K

     There were no reports filed on form 8-K for the quarter ended September 30,
2002.



                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.





                                        YOUBET.COM, INC.



          November 12, 2002       By:  /s/ Charles F. Champion
                                           -------------------------------------
                                           Charles F. Champion
                                           President and Chief Executive Officer


          November 12, 2002       By:  /s/ Gary Sproule
                                           -------------------------------------
                                           Gary Sproule
                                           Chief Financial Officer



                                       19
<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):

          a.   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

               b.   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.



         November 12, 2002      By:  /s/ Charles F. Champion
                                         -------------------------------------
                                         Charles F. Champion
                                         President and Chief Executive Officer


                                       20
<PAGE>

     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:

          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.



         November 12, 2002    By:  /s/ Gary Sproule
                                       -------------------------------------
                                       Gary Sproule
                                       Chief Financial Officer


                                       21
<PAGE>
                   EXHIBIT 10.1:

 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT FOR CHARLES F. CHAMPION

     THIS SECOND AMENDMENT (the "First Amendment") to Champion Employment
Agreement dated March 11, 2002 (the "Agreement") is made as of September 1, 2002
by and between Youbet.com, a Delaware Corporation ("the "Company"), and Charles
F. Champion ("Executive").

     WHEREAS, when the Company initially approached the Executive about becoming
employed by the Company, the Executive indicated that if he were to accept the
Company's offer, he would be taking a substantial reduction in the compensation
that he had been paid by other employers; and

     WHEREAS, at the time the Company employed the Executive, the Company was
not in a financial position to meet the salary expectations of the Executive,
however, the Company indicated to the Executive that if it were able to make an
adjustment to his compensation it would certainly consider doing so; and

     WHEREAS, since becoming employed by the Company, the Executive has, among
other contributions, instituted several important cost savings for the Company
and has significantly reduced its expenses; and

     WHEREAS, although the Company is not yet in a position to bring the
Executive to the salary level at which he was compensated in previous
employment, the Company at this time desires to recognize the Executive's
efforts, to bring the Executive closer to that salary level, and to make a few
other changes to recognize the Executive's value to the Company; and


     WHEREAS, the Agreement was amended pursuant to a First Amendment dated
April 22, 2002;


     WHEREAS, in light of the foregoing, the Company and Executive wish to
further amend the Agreement, as follows;


     NOW, THEREFORE, in consideration of the foregoing, the Agreement is amended
as hereinafter provided:


     1.Title.

     Effective September 11, 2002, Section 1, Employment; Duties and Acceptance
     shall be amended to be and read as follows:

1.   EMPLOYMENT; DUTIES AND ACCEPTANCE:

     Employment by Company.
      ---------------------
     The Company hereby engages Executive, and Executive hereby agrees to serve
     as President and Chief Executive Officer of the Company, on the terms and
     conditions of this Agreement. Throughout the Term of this Agreement,
     Executive shall, subject to the provisions contained herein, devote
     substantially all of his work time to the employment described hereunder.
     Executive shall report solely to the Board. All executive level officers
     (and those individuals reporting to such officers) shall report to the
     Executive. As long as Executive is acting as President and Chief Executive
     Officer, Executive shall be a member of the Board of Directors of the
     Company, but shall resign from the Board of Directors at such time as he is
     not acting in such capacity.
                                       22
<PAGE>
2.   Duties.
      ------

     Effective September 11, 2002, item (j) of Section 1 under Duties shall be
     amended to be and read as follows:

(j)  Support the Co-Founder and Chairman of the Board in the management of
     investor relations activities such as working with Wall Street analysts,
     participating in quarterly conference calls, investor conferences,
     investment requirements and other related shareholder events.

3.   Outside Business Interests.
     --------------------------

     Effective September 11, 2002, the portion of the Agreement in Section 1
     dealing with outside business interests shall be amended to be and read as
     follows:

          Executive may serve, with the approval of the Chairman, which approval
          shall not be unreasonably withheld, on the boards of directors of, or
          in an advisory capacity to, other entities, charitable organizations
          and not-for-profit corporations; and may pursue passive investments,
          provided that such activities do not unreasonably interfere with
          Executive's duties and responsibilities to the Company or create a
          conflict of interest with the Company.

4.   Section 3(a) Annual Salary.
     --------------------------

     Effective September 1, 2002 Section 3(a) of the Agreement shall be amended
     to be and read as follows:

          Initially, Executive shall receive a salary (the "Annual Salary") at
          the annualized rate of $200,000. Effective September 1, 2002, the
          Executive's Annual Salary shall be increased to an annualized rate of
          $340,000. Thereafter, the Company may from time to time in its
          discretion increase (but not decrease) the Executive's Annual Salary,
          taking into consideration factors such as whether Company is
          profitable, the extent of the contribution the Executive has made to
          the Company, the level of compensation the Executive was paid by prior
          employers, and market conditions. All Annual Salary shall be less such
          deductions as shall be required to be withheld by applicable law and
          regulations and shall be pro-rated for any period that does not
          constitute a full twelve (12) month period. For purposes of
          determining profitability, the applicable period shall be April 1 to
          March 31 and shall be based on EBITDA, excluding any extraordinary
          items, as reflected in the Company's securities filings.

5.      Options.
        -------

          Effective September 1, 2002, Section 3(c) of the Agreement shall be
          amended to be and read as follows:

          Executive is hereby granted 400,000 stock options pursuant to the
          Company's 1998 Stock Option Plan. The 400,000 stock options will have
          an exercise price equal to the closing price of the Company's Common
          Stock on the Effective Time. The stock options will vest as follows:
          the first 100,000 options, ninety (90) days from the Effective Time,
          and the remaining options at the rate of 1/36 per month commencing
          with the Effective Time. Effective September 1, 2002, Executive is
          hereby granted 350,000 additional stock options pursuant to the
          Company's 1998 Stock Option Plan. The 350,000 additional stock options
          will have an exercise price equal to the closing price of the
          Company's Common
                                       23
<PAGE>
          Stock on September 1, 2002. The 350,000 additional stock options will
          vest as follows: the first 50,000 options as of September 1, 2002, and
          the remaining 300,000 options at the rate of 1/30th per month
          commencing September 1, 2002. During the second and third years of the
          Term, Executive shall be eligible to receive stock options at the
          discretion of the Board, provided, however that Executive shall be
          granted stock options in amounts and on terms no less favorable than
          those as may be granted to any other executive officer of the Company.
          To the extent of any conflict between this Agreement, on the one hand,
          and the Stock Option plan and/or the 1998 Stock Option Plan Incentive
          Stock Option Agreement that Participant signs, on the other hand, this
          Agreement shall control.

6.    Change of Control.
      -----------------
          The last paragraph of Section 3 of the Agreement shall be amended to
          be and read as follows:

          For purposes of this Agreement, the term "Change of Control" shall
          mean, a merger, acquisition or other corporate transaction where
          either (1) substantially all the Company's assets or fifty percent
          (50%) or more of the outstanding common stock of the Company is sold
          or acquired, or (2) upon the consummation of any transaction involving
          over fifty percent (50%) of the assets or outstanding stock of the
          Company, the Company's existing Board as of the date immediately
          preceding the consummation of the transaction no longer constitute a
          majority of the Board as of any date within the twelve (12)
          consecutive months subsequent to consummation of the transaction, or
          (3) TVG, Inc., or any of its related-entities or affiliates, or in
          conjunction with any of the major U.S. racetracks or their affiliates,
          owns or controls, directly or indirectly, thirty-three percent (33%)
          or more of the outstanding common stock of the Company. In the event
          that there is a Change of Control (as defined above), the Company
          shall issue to the Executive a special achievement bonus of one
          hundred fifty thousand (150,000) shares of the Company's stock upon
          such Change of Control.

7.    Duplicate Living Expenses.
      -------------------------

The following subsection (d) shall be added to Section 4 of the Agreement:

     (d) The Company agrees that it will reimburse the Executive sixty thousand
     and no/100 dollars ($60,000.00) during the period September 1, 2002 through
     August 31, 2003 for living expenses for the Executive to maintain an
     additional household in the Los Angeles, California area. The Board may, in
     its discretion, extend this payment beyond August 31, 2003.

8.     Cause.
       -----
Effective September 11, 2002, Section 7(d)(iv) of the Agreement shall be amended
to be and read as follows:

     (iv) the failure of the Executive to be licensable in his capacity as Chief
          Executive Officer of the Company;

9.    Good Reason.
      -----------

     Effective September 11, 2002, item (iv) of Section 7(e) of the Agreement
     concerning the definition of Good Reason (located on page 10) shall be
     amended to be and read as follows:
                                       24
<PAGE>
           EXHIBIT 10.2:

                   EMPLOYMENT AGREEMENT FOR MICHAEL J. VEITCH

                           VEITCH EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") dated as of September 30, 2002 is
by and between Youbet.com, Inc., a Delaware corporation ("the Company"), and
Michael Veitch ("Executive"), in connection with the Company's engagement of
Executive for personal services.

1.   EMPLOYMENT; DUTIES AND ACCEPTANCE:

     Employment by Company.

     The Company hereby engages Executive, and Executive hereby agrees to serve
as Vice President and Chief Marketing Officer of the Company on the terms and
conditions of this Agreement. Throughout the Term of this Agreement, Executive
shall, subject to the provisions contained herein, devote substantially all of
his work time to the employment described hereunder. Executive shall report
solely to the President and Chief Executive Officer.

     Location of Employment.

     Executive shall be based in Sherborn, Massachusetts. However, Executive
recognizes that Executive will need to travel to the Company's headquarters in
Woodland Hills, California to fulfill his responsibilities.

    Duties.
    ------

     Executive shall have the following duties:

     (a)  Define the vision, direction, and goals of the Marketing Department.

     (b)  Direct all marketing plans and sales operations of the Company.

     (c)  Support the Chief Financial Officer in the management of investor
          relations activities such as working with Wall Street analysts,
          participating in quarterly conference calls, investor conferences,
          investment requirements and other related shareholder events.

     (d)  Participate in mergers and acquisition projects and due diligence, and
          drive the integration of newly acquired operations.

     (e)  Perform such other executive duties as the President and Chief
          Executive Officer may reasonably require.
                                       25
<PAGE>
    Outside Business Interests.
    --------------------------

     Executive may serve, with the approval of the President and Chief Executive
Officer which approval shall not be unreasonably withheld, on the boards of
directors of, or in an advisory capacity to, other entities, charitable
organizations and not-for-profit corporations; and may pursue passive
investments, provided that such activities do not unreasonably interfere with
Executive's duties and responsibilities to the Company or create a conflict of
interest with the Company.


     2.   TERM:

     The term of Executive's employment hereunder shall commence as of the date
hereof (the "Effective Time") and end on October 1, 2004 (the "Term") unless
sooner terminated pursuant to Section 7 hereof. After the Term, the employment
of Executive shall be at will, and as such either party may terminate this
Agreement upon 30 days prior written notice to the other party.

     3.   COMPENSATION AND BENEFITS:

      (a)   Salary.
            ------

     During the first year of the Term, Executive shall receive a salary (the
"Annual Salary") at the rate of $200,000 per annum. During the second year of
the Term, Executive shall receive an Annual Salary of $250,000. All Salary shall
be less such deductions as shall be required to be withheld by applicable law
and regulations and shall be pro-rated for any period that does not constitute a
full twelve (12) month period.

     (b)   Bonuses.
           -------

     Executive shall be entitled to bonuses as follows:

     (i)  Executive shall receive $25,000 as a signing bonus upon execution of
          this Agreement. Any other bonus for the first year of the Term shall
          be at the Board's discretion with no guaranteed minimum. (

     ii)  For the second year of the Term, a bonus at the Board's discretion,
          but Executive shall receive not less than 40% of the Annual Salary
          based on mutually agreed upon business objectives, provided, that in
          any event Executive shall receive at least 20% of the Annual Salary if
          the Company is profitable for the second year of the Term.

     (iii)The business objectives for year one of the Term are set forth on
          Exhibit A attached hereto and for year two of the Term shall be
          determined before the start of such year of the Term. For purposes of
          determining profitability, the applicable period shall be July 1 to
          June 30 and shall be based on EBITDA, excluding any extraordinary
          items, as reflected in the Company's securities filings.

      (c)     Stock Options.
              -------------

     Executive is hereby granted 100,000 stock options pursuant to the Company's
1998 Stock Option Plan. The 100,000 stock options will have an exercise price
equal to the closing price of the Company's Common Stock on September 30, 2002.
The stock options will vest sixty (60) days from the Effective Date and shall be
exercisable for five (5) years after they vest..

     Any unvested options shall terminate as provided in the Company's 1998
Stock Option Plan or as otherwise set forth herein. To the extent of any
conflict between this Agreement, on the one hand, and the Stock Option plan
and/or the 1998 Stock Option Plan Incentive Stock Option Agreement that
Executive signs, on the other hand, this Agreement shall control.
                                       26
<PAGE>
     Upon a Change of Control (as defined hereto), all unvested stock options of
the Executive granted by the Company shall immediately vest (up to the maximum
granted to the Executive) and be exercisable for up to five (5) years from the
date of vesting.

(d)     Severance.
        ---------

     Upon a "Change of Control" the Company has the option to terminate the
Executive's employment. If Executive's employment with the Company is terminated
upon a Change of Control, (1) Executive shall also be entitled to receive
through the date of Executive's termination Executive's Annual Salary, any
earned and unpaid bonus, accrued and unused vacation, if any, and Fringe
Benefits, and (2) in addition, the Company shall provide the Executive with the
following severance benefits (the "Severance Benefits"): severance pay, in a
lump sum, equal to (i) 90 days of his Annual Salary and the value of continuing
his Fringe Benefits for that period of time, if the Company waives in writing
the post-employment restriction on Executive provided for in Sections 5(c) and
(d) of this Agreement, or (ii) 180 days of his Annual Salary and the value of
continuing his Fringe Benefits for that period of time, if the Company does not
waive in writing the post-employment restriction on Executive provided for in
Section 5(c) and (d) of this Agreement.

     For purposes of this Agreement, the term "Change of Control" shall mean, a
merger, acquisition or other corporate transaction where (1) substantially all
the Company's assets or fifty percent (50%) or more of the outstanding common
stock of the Company is sold or acquired, (2) upon the consummation of any
transaction involving over fifty percent (50%) of the assets or outstanding
stock of the Company, the Company's existing Board as of the date immediately
preceding the consummation of the transaction no longer constitute a majority of
the Board as of any date within the twelve (12) consecutive months subsequent to
consummation of the transaction, or (3) TVG, Inc., or any of its
related-entities or affiliates, or in conjunction with any of the major U.S.
racetracks or their affiliates, owns or controls, directly or indirectly,
thirty-three percent (33%) or more of the outstanding common stock of the
Company.

    4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS:

     (a)  Fringe Benefits. Executive shall be permitted during the Term to
          participate in any group life, medical, hospitalization, dental,
          health and accident and disability plans, supplemental health care
          plans and plans providing for life insurance coverage, and any other
          plans and benefits, generally maintained by Company for executives of
          the stature and rank of Executive during the Term hereof, each in
          accordance with the terms and conditions of such plans (collectively
          referred to herein as "Fringe Benefits"); provided, however, that
          Company shall not be required to establish or maintain any such Fringe
          Benefits.

     (b)  Vacation. Executive shall accrue, in addition to sick days and days on
          which the Company is closed, paid vacation days at the rate of four
          weeks per year.

     (c)  Expenses. The Company will reimburse Executive for actual and
          necessary travel and accommodation costs, entertainment and other
          business expenses incurred as a necessary part of discharging the
          Executive's duties hereunder, subject to receipt of reasonable and
          appropriate documentation by the Company and in accordance with
          Company policy. The Company will also reimburse Executive $750 per
          month for all business related operating expenses of Executive's
          automobile. Additionally, Executive will receive or be reimbursed for
          a cellular phone and laptop computer. The Company will reimburse
          Executive for legal fees (not to exceed $3,500) incurred in connection
          with the negotiation and preparation of this Agreement. Executive will
          be reimbursed for an annual physical, to the extent not covered by
          medical insurance.

     (d)  Living Expenses. Because the Executive will be based in Massachusetts
          during the Term, the Company agrees that, subject to the receipt of
          appropriate documents, it will reimburse the Executive up to thirty
          thousand and no/100 dollars ($30,000) during the period September 30,
          2002 through September 30, 2003 for housing and meal expenses the
          Executive
                                       27
<PAGE>
          incurs while working in the Los Angeles, California area for the
          Company (the "Living Expenses"). If there is ever a determination that
          the Living Expenses are taxable income to the Executive, the Company
          agrees to reimburse the Executive to cover any applicable federal and
          state taxes, interest, and penalties he incurs in connection
          therewith. The foregoing sentence shall survive the termination of
          Executive's employment with the Company for any reason. The Board may,
          in its discretion, extend this payment beyond September 2003.
          Notwithstanding anything herein to the contrary, Employee shall be
          responsible for all expenses related to his office in Massachusetts.

5.      CERTAIN COVENANTS OF EXECUTIVE:

     Without in any way limiting or waiving any right or remedy accorded to
Company or any limitation placed upon Executive by law, Executive agrees as
follows:

       (a)    Confidential Information:

          Executive agrees that, neither during the Term nor at anytime
          thereafter shall Executive (i) disclose to any person, firm or
          corporation not employed by the Company or any affiliate of either
          (the "Protected Company") or not engaged to render services to any
          Protected Company or (ii) use for the benefit of himself, or others,
          any confidential information of any Protected Company obtained by the
          Executive prior to the execution of this Agreement, during the Term or
          any time thereafter, including, without limitation, "know-how," trade
          secrets, details of suppliers, pricing policies, financial data,
          operational methods, marketing and sales information or strategies,
          product development techniques or plans or any strategies relating
          thereto, technical processes, designs and design projects, and other
          proprietary information of any Protected Company; provided, however,
          that this provision shall not preclude the Executive from (x) upon
          advice of counsel and notice to the Company, making any disclosure
          required by any applicable law or (y) using or disclosing information
          known generally to the public (other than information known generally
          to the public as a result of any violation of this Section 5(a)).

          (b) Property of Company. Any interest in trademarks, service-marks,
          copyrights, copyright applications, patents, patent applications,
          slogans, developments and processes which the Executive, during the
          Term, may develop relating to the business of the Company in which the
          Company may then be engaged and any memoranda, notes, lists, records
          and other documents (and all copies thereof) made or compiled by the
          Executive or made available to the Executive concerning the business
          of any Protected Company shall belong and remain in the possession of
          any Protected Company, and shall be delivered to the Company promptly
          upon the termination of the Executive's employment with Company or at
          any other time on request.

          (c) Non-Interference. Executive will not, during the Term hereof and
          for a period of one (1) year after the Term induce any person who is
          an employee or consultant of the Company to terminate his relationship
          with the Company.

          (d) Non-Competition. Without the prior written consent of the Company,
          Employee shall not be employed by the Internet gaming divisions of
          Magna, Inc., TVG, Inc. or by any other Internet gaming division of a
          direct competitor of the Company during, or for one year after the
          termination of, his employment with the Company. The parties agree
          that, as of the date this Agreement is being executed, the only
          existing competitors of the Company are the Internet gaming divisions
          of Magna, Inc., AmeriTab/Winticket and TVG, Inc.

     6.   OTHER PROVISIONS:

     (a)  Rights and Remedies Upon Breach. If the Executive breaches, or
          threatens to commit a breach of, any of the provisions of Section 5
          hereof (the "Restrictive Covenants"), the Company shall have the
          following rights and remedies, each of which rights and remedies shall
          be independent of the other and severally enforceable, and all of
          which rights and remedies shall be in addition to, and not in lieu of,
          any other rights and remedies available to the Company at law or in
          equity.
                                       28
<PAGE>
     (b)  Accounting. The right and remedy to require the Executive to account
          for and pay over to the Company all compensation, profits, monies,
          accruals, increments or other benefits (collectively "Benefits")
          derived or received by the Executive as a result of any transactions
          constituting a breach of any of the Restrictive Covenants, and the
          Executive shall account for and pay over such Benefits to the Company.

     (c)  Severability of Covenants. If any court determines that any of the
          Restrictive Covenants, or any part thereof, is invalid or
          unenforceable, the remainder of the Restrictive Covenants shall not
          thereby be affected and shall be given full effect, without regard to
          the invalid portions.

     (d)  Blue-Penciling. If any court construes any of the Restrictive
          Covenants, or any part thereof, to be unenforceable because of the
          duration or geographic scope of such provision, such court shall have
          the power to reduce the duration or scope of such provision and, in
          its reduced form, such provision shall then be enforceable.

     (e)  Enforceability in Jurisdictions. The parties intend to and hereby
          confer jurisdiction to enforce the Restrictive Covenants upon the
          courts of any jurisdiction within the geographical scope of such
          Restrictive Covenants. If the courts of any one or more of such
          jurisdictions hold the Restrictive Covenants unenforceable by reason
          of the breadth of such scope or otherwise, it is the intention of the
          parties that such determination not bar or in any way affect Company's
          right to the relief provided in this Section 6 in the courts of any
          other jurisdiction within the geographical scope of such Restrictive
          Covenants, as to breaches of such Restrictive Covenants in such other
          respective jurisdictions, such Restrictive Covenants as they relate to
          each jurisdiction being, for this purpose, severable into diverse and
          independent covenants.

     (f)  Injunctive Relief. Executive agrees and understands that the remedy at
          law for any breach by Executive of the provisions of Section 5 hereof
          may be inadequate and that damages resulting from such breach may not
          be susceptible to being measured in monetary terms. Accordingly, it is
          acknowledged that upon Executive's breach of any provision of Section
          5 hereof, the Company shall be entitled to seek to obtain from any
          court of competent jurisdiction injunctive relief to prevent the
          continuation of such breach. Nothing contained herein shall be deemed
          to limit the Company's remedies at law or in equity for any breach of
          the provisions of Section 5 hereof which may be available to the
          Company.

7.      TERMINATION:

     (a)  Termination Upon Death. If, during the Term, Executive dies, Executive
          shall be entitled to receive Executive's Annual Salary, any earned and
          unpaid bonus, accrued and unused vacation, if any, and Fringe Benefits
          earned through the date of Executive's death. In addition, Executive
          shall receive all vested options, and all unvested options of the
          Executive shall vest as described in Section 3(c) of this Agreement.
          All such options shall be exercisable for up to five years from the
          date of vesting.

     (b)  Termination Upon Disability. If, during the Term, Executive should
          become so physically or mentally disabled whether totally or
          partially, that Executive is unable to perform the duties, functions
          and responsibilities required hereunder for (i) a period of at least
          six (6) consecutive months or (ii) shorter periods aggregating at
          least twelve (12) months ("Disability"), then in such event, Company
          may, at any time thereafter, by written notice to Executive, terminate
          Executive's employment hereunder. Executive agrees to submit to
          reasonable medical examinations upon the request of Company to
          determine whether he has a Disability. The determination of whether or
          not Executive is subject to a Disability shall be made jointly by the
          Executive's doctor (the "Executive's Doctor") and by a board certified
          doctor selected by Company of the appropriate recognized field of
          medicine or psychiatric practice who has examined Executive (the
          "Company's Doctor"). If the Executive's Doctor and the Company's
          Doctor cannot agree on such determination, then they shall select a
          mutually agreeable board certified doctor or practitioner of the
          appropriate recognized field of medicine or psychiatric practice (the
          "Third Doctor") to make the
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<PAGE>
          determination. After the Third Doctor has examined the Executive and
          reviewed the findings of the Executive's Doctor and the Company's
          Doctor, the Third Doctor shall determine whether the Executive has a
          Disability, and his or her determination shall be final and binding.
          The Company and Executive shall pay for the cost and expense of their
          own doctors, and the Company shall pay for the cost of the Third
          Doctor, should the Third Doctor be required. If Executive's services
          or his employment with the Company are terminated, as aforesaid,
          Executive shall be entitled to receive Executive's Annual Salary, any
          earned and unpaid bonus, accrued and unused vacation, if any, and
          Fringe Benefits earned through the date of Executive's termination. In
          addition, Executive shall receive all vested options, and all unvested
          options of the Executive shall vest as described in Section 3(c) of
          this Agreement. All such options shall be exercisable for up to five
          years from the date of vesting.

     (c)  Designation of Beneficiary. The parties hereto agree that the
          Executive shall designate, by written notice to the Company, a
          beneficiary to receive the payments and options described in Section 7
          in the event of his death and the Executive may change the designation
          of any such beneficiary from time to time by written notice to the
          Company. In the event the Executive fails to designate a beneficiary
          as herein provided, any payments which are to be made to the
          Executive's designated beneficiary under Section 7 shall be made to
          the Executive's widow, if any, during her lifetime. If the Executive
          has no designees or widow, such payments shall be paid to the
          Executive's estate.

     (d)  Termination for Cause. The Company shall have the right to terminate
          Executive's employment for "Cause" only upon the occurrence of any of
          the following:

          (i)  the Executive's theft or embezzlement of the Company's money,
               equipment, or securities;

          (ii) the Executive's conviction of a felony (other than a traffic
               violation) which results in material injury to the Company;

          (iii)the Executive's willful act of disloyalty that is intended to
               and results in material injury to the Company; (iv) the failure
               of the Executive to be licensable in his capacity as Chief
               Marketing Officer of the Company; (v) the Executive's chronic
               alcoholism or addiction to non-medically prescribed drugs; or
               (vi) breach by the Executive of his confidentiality, no
               solicitation, and non-competition covenants contained in his
               employment agreement with the Company.

               Any act or omission of the Executive based upon authority given
               pursuant to the Articles of Incorporation of the Company or
               Bylaws of the Company or a resolution duly adopted by the
               Company's Board of Directors or based upon the advice of counsel
               for the Company shall be conclusively deemed to be done by
               Executive in good faith and in the best interests of the Company.

     If Executive's services are terminated as set forth in this subsection (d),
Executive's services shall cease as of such effective date of termination and
all compensation shall cease as of such effective date.
                                       30
<PAGE>
     (e)      Termination  with Good Reason.
              --------------------------

     The Executive shall have the right to terminate his employment for "Good
Reason" only upon the occurrence of the following:

          (i)  withdrawal by the Company from Executive of any substantial part
               of his duties then being performed, or responsibility or
               authority then being carried, by him, or a material change in the
               Executive's reporting lines; assignment by the Company to
               Executive of substantial additional duties or responsibilities
               which are inconsistent with the duties or responsibilities then
               being carried by Executive; material reduction in the level of
               Executive's responsibility, authority, autonomy, title,
               compensation, executive perquisites, or other employee benefits;
               failure to keep Executive in office at a level at least as high
               as Vice President and Chief Marketing Officer of the Company; the
               Company's other material breach of Executive's employment
               agreement (or any other agreement between Executive and the
               Company); and the failure of the Company to cure such breach
               within thirty (30) days of notice thereof; material fraud on the
               part of the Company; or discontinuance of the active operation of
               business of the Company, or insolvency of the Company, or the
               filing by or against the Company of a petition in bankruptcy or
               for reorganization or restructuring pursuant to applicable
               insolvency or bankruptcy law.


          (f)  Effective of Termination With Good Reason or Without Cause. If
               during the Term the Executive resigns for Good Reason or his
               employment is terminated without Cause: the Company will pay
               Executive (1) his salary, unused vacation pay, and Fringe
               Benefits through the last day of his employment with the Company,
               (2) his unpaid reimbursable business expenses incurred by him
               through the last day of his employment with the Company, and (3)
               any earned and unpaid bonus. In addition (i) the Company shall
               provide the Executive with the Severance Benefits provided for in
               Section 3(d) of this Agreement, and (ii) all unvested stock
               options of the Executive under this Agreement shall immediately
               vest (up to the maximum grant to the Executive) and be
               exercisable for up to five (5) years from the date of vesting.


8. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES:

          (a)  Right to Enter Into Agreement. Executive has the unfettered right
               to enter into this entire Agreement on all of the terms,
               covenants and conditions hereof; and Executive has not done or
               permitted to be done anything, which may curtail or impair any of
               the rights granted to Company herein.

          (b)  Breach Under Other Agreement or Arrangement. Neither the
               execution and delivery of this Agreement nor the performance by
               Executive of any of his obligations hereunder will constitute a
               violation or breach of, or a default under, any agreement,
               arrangement or understanding, or any other restriction of any
               kind, to which Executive is a party or by which Executive is
               bound.

          (c)  Services Rendered Deemed Special, Etc. Executive acknowledges and
               agrees that the services to be rendered by him hereunder are of a
               special, unique, extraordinary and intellectual character which
               gives them peculiar value, the loss of which cannot be adequately
               compensated for in an action at law and that a breach of any
               term, condition or covenant hereof will cause irreparable harm
               and injury to the Company and in addition to any other available
               remedy the Company will be entitled to seek injunctive relief.

9. USE OF NAME:

     The Company shall have the right during the Term hereof, subject to the
     approval of the Executive, which approval Executive will not unreasonably
     withhold, to use Executive's name, biography and approved likenesses in
     connection with Company's business, including advertising their products
     and services; and the Company may grant such rights to others, but not for
     use as a direct endorsement.
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<PAGE>
10.ARBITRATION:

     Any dispute whatsoever arising out of or referable to this Agreement,
including, without limitation, any dispute as to the rights and entitlements and
performance of the parties under this Agreement or concerning the termination of
Executive's employment or of this Agreement or its construction or its validity
or enforcement, or as to the arbitrator's jurisdiction, or as to the ability to
arbitrate any such dispute, shall be submitted to final and binding arbitration
in Los Angeles, California by and pursuant to the Labor Arbitration Rules of the
American Arbitration Association with discovery proceedings pursuant to Section
1283.05 of the California Code of Civil Procedure. The arbitrator shall be
entitled to award any relief, which might be available at law or in equity,
including that of a provisional, permanent or injunctive nature. The prevailing
party in such arbitration as determined by the arbitrator, or in any proceedings
in respect thereof as determined by the person presiding, shall be entitled to
receive its or his reasonable attorneys' fees incurred in connection therewith.

11.NOTICES:

               (a)  Delivery. Any notice, consent or other communication under
                    this Agreement shall be in writing and shall be delivered
                    personally, telexed, sent by facsimile transmission or
                    overnight courier (regularly providing proof of delivery) or
                    sent by registered, certified, or express mail and shall be
                    deemed given when so delivered personally, telexed, sent by
                    facsimile transmission or overnight courier, or if mailed
                    two (2) days after the date of deposit in the United States
                    mail as follows: to the parties at the following addresses
                    (or at such other address as a party may specify by notice
                    in accordance with the provisions hereof to the other):

If to Executive, to his address at:

                             156 Farm Road
                             Sherborn, MA 01770-1622

                             with a copy to:

                             Funkhouser Vegosen Liebman & Dunn Ltd.
                             55 West Monroe Street - Suite 2410
                             Chicago, Illinois 60603
                             Attention:  Jonathan Vegosen, Esq.

                             If to Company, to its address at:
                             Youbet.com, Inc.
                             5901 Desoto Avenue
                             Woodland Hills, CA 91367
                             Attention: Chief Executive Officer
                             Fax (818) 668-2121

                             with a copy to:

                             Loeb & Loeb LLP
                             10100 Santa Monica Blvd.
                             Suite 2200
                             Los Angeles, CA 90067
                             Attention:  David L. Ficksman, Esq.

               (b)  Change of Address. Either party may change its address for
                    notice hereunder by notice to the other party in accordance
                    with this Section 11.
                                       32
<PAGE>
12.COMPLETE AGREEMENT; MODIFICATION AND TERMINATION:

     This Agreement contains a complete statement of all the arrangements
between the parties with respect to the matters covered hereby and supersedes
all existing agreements between the parties concerning the subject matter
hereof. This Agreement may be amended, modified, superseded or canceled, and the
terms and conditions hereof may be waiver, by the party waiving compliance. No
delay on the part of any party in exercising any shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right or
remedy, nor any single or partial exercise of any such right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy.

13.HEADINGS:

     The headings in this Agreement are solely for the convenience of reference
and shall not affect its interpretation.


14. INDEMNIFICATION:

     The Company will indemnify, defend, and hold Executive harmless from and
against any and all demands, actions, claims, suits, liabilities, losses,
damages, fees (including reasonable attorneys' fees) and expenses relating to
any acts or omissions to act in the course or scope of his duties he performs on
behalf of the Company while employed by it and/or while serving as an executive
and/or director of the Company, and to provide indemnification and executives
and directors liability insurance to him at least to the same extent that it
provides such indemnification and insurance to the executives and directors of
the Company. Executive will have the option to select his own counsel or be
represented by counsel for the Company. The provisions herein shall survive the
termination of Executive's employment with the Company for any reason.

     (iv) failure to keep Executive in office as President and Chief Executive
          Officer and/or on the Board of Directors of the Company;

10.   Notices.
      --------

     Effective September 1, 2002, the language in Section 10(a) of the Agreement
     for notices to the Company shall be amended to be and read as follows:

                             Youbet.com, Inc.
                             5901 Desoto Avenue
                             Woodland Hills, CA 91367
                             Attention:  Chairman
                             Fax (818) 668-2121

     The Company will reimburse Executive for reasonable legal fees incurred in
     connection with the negotiation and preparation of this Second Amendment.
     Except as otherwise amended by this Second Amendment and the First
     Amendment, the Agreement shall remain in full force and effect.
                                       33
<PAGE>
                 EXHIBIT 99.1:

    CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report on form 10-QSB for the
Quarter Ended September 30, 2002 (the "Report") by Youbet.com, Inc., each of the
undersigned hereby certifies that:

               1.   The Report complies in all material respects with the
                    requirements of section 13(a) or 15(d) of the Securities
                    Exchange Act of 1934, as amended, and

               2.   The information contained in the Report fairly presents, in
                    all material respects, the financial condition and results
                    of the operations of Registrant.



   November 12, 2002         By:  /s/ Charles F. Champion
                                      -------------------------------------
                                      Charles F. Champion
                                      President and Chief Executive Officer


   November 12, 2002         By:  /s/ Gary Sproule
                                      -------------------------------------
                                      Gary Sproule
                                      Chief Financial Officer








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