Youbet.com, Inc. (NASDAQ: UBET) today announced earnings for the three-month period ended March 31, 2008. Summary results for the quarter follow:

Youbet Chairman and Chief Executive Officer Michael Brodsky commented: "We continue to focus on our restructuring, and we began to realize benefits in the first quarter. We are also continuing our efforts at Youbet Express to acquire additional content, seek incremental revenue from existing customers, and attract new players to our platform. Although our expense reduction plan is showing positive results, maintaining and improving cost containment, yields and operating margins remain high priorities at both Youbet Express and United Tote."

First Quarter 2008 Operating Results

The following table summarizes the key Youbet Express components of revenue in the three-month period ended March 31, 2008 and 2007.

Total revenue from continuing operations was $24.5 million, a decrease of 14% from the prior-year period. Youbet Express revenue was $19.2 million, down 18% from first quarter 2007 based on handle of $95.5 million, a decrease of 16% from the prior-year period. Youbet Express yield in the first quarter of 2008 was 8.4%, an improvement of 30 basis points from the prior-year period.

The decline in handle at Youbet Express was attributable to the previously announced loss of TrackNet content as well as the previously announced decision to cease accepting wagers from customers in Arizona, Kansas and Washington D.C. Total handle from these sources in the first quarter of 2007 was $23.8 million.

Youbet Express same-track handle increased $3.4 million, or 3.7%, over first quarter 2007 results. Youbet Express handle attributable to new content was $1.7 million.

For the first quarter of 2008, totalizator contract revenue at United Tote of $5.2 million was comparable with the prior-year period, while equipment sales were up slightly compared with 2007. Cost of revenue decreased 6% compared to the prior-year period to $3.6 million. This decrease was attributable to lower costs due to restructuring initiated during the second half of 2007. Gross profit for the first quarter 2008 increased 17% over the prior-year period to $1.7 million.

Total operating expenses associated with continuing operations for the three months ended March 31, 2008 decreased $1.5 million to $8.1 million from $9.6 million in the prior-year period. Research and development costs of $0.9 million were flat with the same period in 2007. Sales and marketing costs of $1.2 million were down $0.9 million, or 42%, from 2007 levels due to management's implementation of a more targeted marketing strategy as well as other cost reduction initiatives implemented in the first quarter of 2008. Total general and administrative expense, which includes payroll-related costs, transaction processing fees and professional consulting fees, was $4.2 million, a decrease of $0.8 million, or 16%, in the first quarter of 2008 compared to the first quarter of 2007. This decline is attributable to reduction in payroll costs and lower accounting related expenses due to the company's improved internal control environment. Depreciation and amortization was $1.8 million, an increase of $0.2 million, or 12%, compared to the first quarter of 2007, primarily a result of higher depreciation at United Tote.

For the first quarter of 2008, the company's net income from continuing operations, which includes Youbet Express and United Tote, was $1.2 million, or $0.03 per diluted share, compared to net income from continuing operations of $0.8 million, or $0.02 per diluted share, in the prior-year quarter. Net income for total operations, including discontinued operations, for the first quarter 2008 was $0.02 per share compared to $0.04 in the prior-year quarter.

Liquidity and Capital Resources

As of March 31, 2008, we had negative net working capital of $15.6 million, compared to negative working capital of $13.3 million at December 31, 2007. The decline in working capital primarily relates to the acceleration of the credit facility term to January 31, 2009, which requires the company to report the amount due under the term loan as a current liability. As of March 31, 2008, we had $9.0 million in unrestricted cash and cash equivalents, $7.7 million in restricted cash and $13.8 million in total debt. Net cash provided by operating activities for the first three months of 2008 was $4.7 million. Net cash used in investing activities for the first quarter of 2008 was $0.3 million. Net cash used in financing activities was $1.9 million and was attributable to the repayment of debt.

During the first quarter, we did not repurchase any shares; as of March 31, 2008, we had repurchased a total of 586,766 shares for approximately $1 million during 2007. Youbet's $10 million repurchase program allows the company to repurchase up to two million common shares in total by March 2009.

Subsequent Events

As previously announced, Michael Brodsky was appointed as President and Chief Executive Officer effective April 24, 2008. In consideration of his appointment as an officer, the compensation committee approved an annual salary of $250,000, and for his service as an officer and on the management advisory committee of the board of directors, the board of directors approved the grant to Mr. Brodsky of a stock option for 600,000 shares of our common stock with an effective grant date of May 9, 2008 and an exercise price equal to the closing price of our common stock on the grant date. The stock option award will vest as follows:

• 200,000 shares if Mr. Brodsky remains with the company on December 31, 2008; and

• 200,000 shares if Mr. Brodsky remains with the company on December 31, 2008, and the company achieves a certain financial target, as determined by our compensation committee; and

• 200,000 shares if Mr. Brodsky remains with the company on December 31, 2008, and the company achieves a certain other financial target, as determined by our compensation committee.

The stock options will expire on May 8, 2013. The award agreement also will provide that 50% of any shares of common stock acquired on exercise of the option cannot be sold prior to January 1, 2010, and the remaining 50% may be sold on or after January 1, 2011.

Conference Call Information

The company will host a conference call and webcast today at 4:30 p.m. Eastern time today. Both the call and webcast are open to the general public.

The conference call number is 888-213-3922. Please call ten minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at http://www.youbet.com (select About Youbet.com). Please log-on 15 minutes in advance to ensure that you are connected prior to the call's initiation. Questions and answers will be reserved for call-in analysts and investors. Following its completion, a replay of the call can be accessed for 30 days on the Internet at the above link.

About Youbet.com, Inc.

Youbet.com is a diversified provider of technology and pari-mutuel horse racing content for consumers through 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 through its United Tote subsidiary. Youbet.com's website offers members the ability to watch and, in most states, wager on the widest variety of horse racing content available worldwide. Through this platform, Youbet offers members commingled track pools, live audio/video, up-to-the-minute track information, real-time wagering information, phone wagering, race replays, simultaneous multi-race viewing and value-added handicapping products.

Youbet.com's Players Trust(SM:SM) revolutionized advanced deposit wagering by placing player deposits in the custody of a major U.S. financial institution.

The Youbet Advantage(TM:TM) Player Rewards Program is the only player incentive program of its kind in the U.S. pari-mutuel market; and Youbet's play-for-points racing education website - www.Youbet.net - is helping to attract new fans to racing. Youbet.com is the exclusive provider of horse racing content for CBS SportsLine.com. More information on Youbet.com can be found at www.youbet.com.

Forward-Looking Statements

This press release contains certain forward-looking statements. Statements containing expressions such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "potential," "continue," or "pursue," or the negative or other variations thereof or comparable terminology used in Youbet's press releases and in its reports filed with the Securities and Exchange Commission are intended to identify forward-looking statements. These forward-looking statements, which are included in accordance with Section 21E of the Securities Exchange Act of 1934, as amended, may involve known and unknown risks, uncertainties and other factors that may cause Youbet's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although Youbet believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations. These risks, uncertainties and other factors include our ability to successfully manage expenses and execute on revenue enhancements, wagering ceasing to be legal in jurisdictions where we currently operate, and the limitation, conditioning or suspension of any of our licenses. Other risks are discussed in Youbet's Form 10-K for the year ended December 31, 2007, and in Youbet's other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. Youbet does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.