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Churchill Downs Hedges Bets with Youbet Buy

Date published: 12 November 2009

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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.

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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.