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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
January 19, 2000
YOUBET.COM, INC.
(Exact Name of Registrant as specified in Charter)
Delaware 33-13789LA 95-4627253
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification Number)
1950 Sawtelle Boulevard, Suite 180, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
(310) 444-3300
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On January 14, 2000, Youbet.com announced that it had reached a civil
settlement of the previously announced investigation by the Los Angeles County
District Attorney and the Los Angeles Police Department.
The settlement is reflected by a civil complaint entitled THE PEOPLE OF
THE STATE OF CALIFORNIA V. YOUBET.COM, filed on January 14, 2000 in the Superior
Court of the State of California, County of Los Angeles (Case No. BC223065), and
a concurrent Stipulation for Entry of Final Judgment and Final Judgment Pursuant
to Stipulation.
The complaint alleges that Youbet.com engaged in unfair competition and
made untrue or misleading statements in violation of California Business and
Professions Code, Section 17200 and 17500, respectively, in that its activities
in California allegedly violated California laws relating to bookmaking. The
complaint sought civil monetary and injunctive relief against Youbet.com.
Under the Stipulation in implementation of the settlement, Youbet.com
and the District Attorney for the County of Los Angeles acknowledged that "it is
appropriate and in the interests of justice that there be a prompt and
comprehensive civil resolution of the matter." Youbet.com contended in the
Stipulation (and still contends) that "its activities in California have at all
times been consistent with applicable California law."
Under the Final Judgment Pursuant to Stipulation, which was entered
"prior to the taking of any proof, and without trial or adjudication of any
issue of fact or law ..., and without [the] Judgment constituting an admission
by defendant regarding any issue of fact or law alleged in [the] Complaint",
Youbet.com agreed to injunctive and monetary relief.
- Although Youbet.com contends that it never engaged in such
activities, it agreed not to (a) engage in pool selling or
bookmaking, (b) record any bet or wager, (c) occupy premises
for the purpose of registering or recording any bet or wager
or (d) offer to accept any bet or wager, in violation of the
laws of the State of California. In implementation of this
aspect of the settlement, Youbet.com agreed to relocate
certain of its computer equipment to outside the State of
California.
- Youbet.com also agreed not to accept payment from California
residents for the purpose of parimutuel betting. (Youbet.com
does not, and never has, accepted any such funds, since all
wagering accounts are established directly with the licensed
wagering entity, currently Ladbroke, located in Pennsylvania.
Youbet.com receives compensation directly from Ladbroke for
its services).
- Although Youbet.com contends that it never made any such
statements, Youbet.com agreed not to make any untrue or
misleading statement to California
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residents in connection with the sale of Internet gaming
services to California residents.
- Youbet.com agreed not to enable California residents to use
its system to transmit wagering instructions. (In November
1999 Youbet.com voluntarily suspended this aspect of its
services for California residents).
- Youbet.com agreed to perform a check for California residency
for all new applicants for service.
- Youbet.com agreed to advise California residents for service
and to post on its website the following statement:
"California residents may not utilize the Youbet.com system to
transmit wagering instructions."
The Judgment provides that "nothing in this Final Judgment Pursuant to
Stipulation shall prohibit defendant from accepting membership or subscriptions
for services to California residents which are in accordance with the laws of
the state of California, or from receiving compensation from California
residents for such lawful services."
The Superior Court retains jurisdiction over the Judgment for its
implementation and to enable the parties to seek modification of the injunctive
terms. Youbet.com intends to seek such modifications when the legal environment
is clarified in California and nationally.
Under the settlement Youbet.com agreed to make the following
disbursements aggregating $1,308,250: $208,250 in cost reimbursements;
$600,000 in civil payments to the Los Angeles County District Attorney;
$300,000 in contributions to the Los Angeles County Education Foundation in
support of computer education; and $200,000 to the California Council on
Problem Gaming.
In its press release issued in connection with the settlement, Robert
M. Fell, Youbet.com's Chairman and Chief Executive Officer, said: "We are
pleased to put the California matter behind us. Youbet.com believes that its use
of computers and internet-related communications facilities in connection with
the storage and transmission of wagering data and instructions within the State
of California raises untested questions of law and fact under California law
which have not been adjudicated. When the legal environment is clarified in
California and nationally, it is Youbet.com's intention to resume activities in
California. The settlement enables Youbet.com to concentrate its energies on
developing the You Bet Network, both in the United States and overseas, without
the distraction of protracted and costly proceedings in California."
Attached as EXHIBIT 99.1 hereto and incorporated herein by reference is
a copy of Youbet.com's press release issued on January 14, 2000.
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ITEM 7. EXHIBITS
<TABLE>
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EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
<S> <C>
99.1 Press release dated January 14, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 19, 2000 YOUBET.COM, INC.,
(Registrant)
By: /s/ Phillip C. Hermann
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Phillip C. Hermann
Executive Vice President and
Chief Financial Officer
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FRIDAY JANUARY 14, 6:33 AM EASTERN TIME
COMPANY PRESS RELEASE
YOUBET.COM ANNOUNCES RESOLUTION OF LOS ANGELES INVESTIGATION
LOS ANGELES--(BUSINESS WIRE)--Jan. 14, 2000--Youbet.com, Inc. (Nasdaq:
UBET-news), the online live sporting event company focusing on horse racing,
announced today that it has reached a civil resolution of the investigation
by the Los Angeles County District Attorney and the Los Angeles Police
Department.
Under the settlement, no issues of law or fact were determined
and both Youbet.com and the Los Angeles County District Attorney acknowledged
in their stipulation that "it is appropriate and in the interests of justice
that there be a prompt and comprehensive civil resolution of the matter."
Youbet.com, which has always operated openly in full public view, believes
that its activities in California have complied with all applicable laws and
that it has exercised due care to assure such compliance, including reliance
on advice of counsel.
As part of the settlement, Youbet.com agreed that until California law is
clarified, it will only provide information services to its California
subscribers and will not transmit their wagering instructions. Additionally,
Youbet.com agreed to move from California certain equipment which might be
considered to record wagering information. In connection with the settlement,
Youbet.com disbursed a total of $1,308,250 consisting of $208,250 in cost
reimbursements, $600,000 in civil payments, $300,000 in contributions to the Los
Angeles County Education Foundation in support of computer education and
$200,000 to the California Council on Problem Gambling.
"We are pleased to put the California matter behind us," said Robert M. Fell,
Youbet.com's chairman and chief executive officer. "Youbet.com believes that
its use of computers and internet-related communications facilities in
connection with the storage and transmission of wagering data and
instructions within the State of California raises untested questions of law
and fact under California law which have not been adjudicated.
"When the legal environment is clarified in California and nationally, it is
Youbet.com's intention to resume activities in California. The settlement
enables Youbet.com to concentrate its energies on developing the You Bet
Network, both in the United States and overseas, without the distraction of
protracted and costly proceedings in California."
Youbet.com currently provides members the ability to watch and, in most states,
the ability to wager on a wide selection of coast-to-coast thoroughbred and
harness horse racing, via its exclusive closed-loop network. Youbet.com does not
actually accept or place any wagers. Wagers are accepted and placed only by a
state licensed wagering entity, currently the Ladbroke Pennsylvania facility.
Youbet.com's role in the wagering process is limited to transmitting information
related to the wagers to the licensed wagering facility. Members have 24-hour
access to the network's features, including live racing from a choice of more
than 30 racetracks across the country, commingled track pools, live audio/video,
up-to-the-minute track information, real-time wagering information, and value
added handicapping products.
For further information, visit www.youbet.com.
Forward-Looking Statements: This release may contain forward-looking statements,
which are made pursuant to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Expressions of future goals and similar
expressions reflecting something other than historical fact are intended to
identify forward-looking statements, but are not the exclusive means of
identifying such statements. These forward-looking statements involve a number
of risks and uncertainties, including the timely development and market
acceptance of products and technologies, successful integration of acquisitions,
the ability to secure additional sources of financing, the ability to reduce
operating expense and other factors described in the Company's filing with the
Securities and Exchange Commission. The actual results that the Company achieves
may differ materially from any forward-looking statements due to such risks and
uncertainties. The Company undertakes no obligations to revise or update any
forward-looking statements in order to reflect events or circumstances that may
arise after the date of this release.
Note to Editors: You Bet is a registered trademark of Youbet.com, Inc. All other
brands and products referenced herein are the trademarks or registered
trademarks of their respective holders.
