Track ends pact with Internet betting service

David Strow

Wednesday, July 14, 1999 | 11:57 a.m.

Shares of Station Casinos venture partner Youbet.com Inc. dropped 6 percent this week after a California client dumped the service, but an analyst called it "a non-event."

Hollywood Park Inc. of Inglewood, Calif., said it terminated its contract with Youbet.com on Sunday, and will no longer allow Youbet.com to take bets on Hollywood Park races. Hollywood Park today plans to begin using competitor TVG, a national television network offering interactive wagering.

"The volume of handle through Youbet is extremely disappointing," Hollywood Park Chairman R.D. Hubbard said. "It only amounts to $21,000 a day, which is substantially less than we anticipated."

But BancBoston Robertson Stephens gaming analyst Harry Curtis promptly reiterated his "buy" rating on Youbet.com, setting a 12-month to 18-month price target of $42. The stock closed Monday at $11.75, down 75 cents. It fell further Tuesday to $11.69 but rebounded this morning to $11.88.

"The key to Youbet is their subscriber growth ... before May, it was 278 a month," Curtis said. "Now they're running 2,000 per month. It's not exactly like they're giving up a whole lot of revenue (with Hollywood Park)."

Youbet.com still works with 27 other tracks, Curtis said. The company recorded $435,000 in revenues during the first quarter from commissions on bets taken, but didn't specify what percentage it received on each bet.

Based in Los Angeles, Youbet.com offers an online horse racing information and betting network.

In June, Youbet.com and Station Casinos Inc. of Las Vegas announced plans to develop an in-home interactive race and sports wagering system aimed at Nevadans. That venture is unaffected by the Hollywood Park announcement, a Station spokesman said.

However, Station has taken a small blow; upon closing their joint venture, Station purchased $2 million in Youbet.com stock. As of Monday's close, that investment had lost $321,000 in value, a 16 percent drop.