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Churchill Downs Hedges Bets with Youbet Buy


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It wasn’t all that long ago that most horseracing concerns in the United
States were avidly against online gambling, particularly online sports betting,
because they saw it as a major threat to their business, but that attitude seems
to be changing, as confirmed by a recent Churchill Downs acquisition.

Churchill Downs Inc, the holding company of Churchill Downs Management
Co, owner and operator of Churchill Downs Racecourse in Lexington, Kentucky that
hosts the prestigious Kentucky Derby, has acquired U.S. online horserace betting
and handicapping website, Youbet.com in a deal worth $126.8m.

According to Churchill Downs Inc, the large acquisition was in response to an
increase trend in the United States for racing fans to place their bets over the
internet. The publicly traded Burbank, California-based Youbet.com allows its
registered users to bet on horse races at over 180 tracks around the world.

On Wednesday this week, after news of the acquisition had spread, Churchill
Downs’ share price jumped by 1.2 percent to $31.57, while Youbet stock increased
by 8.6 percent to $2.41. The lucrative cash-and-stock deal between the two
companies is reportedly one of the first and largest of its kind, thus far.

Under the terms of the acquisition, Youbet shareholders are expected to receive
a fixed ratio of 0.0598 share of Churchill Downs common stock plus 97 cents in
cash for every share they own. After the transaction is completed, Youbet
shareholders should own roughly 16 percent of Churchill Downs’ stock.

Said Churchill Downs CEO, Bob Evans, ‘ We are focused on expanding our presence
in online horserace wagering. This is about capturing the opportunity to take
horseracing wagers in the U.S. and possibly further afield. Online wagering
currently accounts for as much as 14 percent of total betting amounts.’

Youbet.com is a diversified provider of technology and pari-mutuel horse racing
content for consumers over the internet and telephone platforms and is a leading
supplier of totalizator systems, terminals and other pari-mutuel wagering
services and systems to the pari-mutuel industry via its United Tote subsidiary.

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