814055--3/13/2006--YOUBET_COM

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If credit card companies, as a policy, refuse to process wagering account transactions due to perceived legal uncertainty surrounding online, live event wagering, our business and results of operations could be adversely affected. If the federal government or state governments impose taxes on wagers, our business or IRG s business could be adversely affected. If our license and content agreement with TVG is terminated or is not renewed, and if we are not able to license such content directly from the track operators, our business and results of operations may be adversely affected. An adverse ruling on one or more claims in our arbitration proceedings with TVG could adversely affect our liquidity and operating performance. We face strong competition from the Television Games Network and others. If, in response to allegations brought before the WTO, the U.S. government amends existing laws to exempt foreign providers of online gambling from, or restricts domestic service providers, our business could be adversely affected. If we are unable to retain our relationships with our content providers, our business could be adversely affected. If we or IRG are unable to retain our core customer base or if we or IRG fail to attract new customers, our business or IRG s business could be adversely affected. The integration of acquired businesses, including IRG and United Tote, may result in substantial costs, delays and other problems. System failures or damage from earthquakes, fires, floods, power loss, telecommunications failures, break-ins or other unforeseen events could harm our business. We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction. If we were to lose the services of Charles Champion, Gary Sproule or other key personnel, we may not be able to execute our business strategy. Our operating results and those of IRG fluctuate seasonally and may be adversely impacted by a reduction in live racing dates due to regulatory factors. If the horse racing tracks that we or IRG carry experience unfavorable weather, it may cause races to be cancelled which would reduce our revenues and those of IRG and cause business to suffer. A horse racing industry controversy could cause a decline in bettor confidence and result in changes to legislation, regulation or industry practices, which could materially reduce the amount wagered on horse racing and increase our costs, and therefore, adversely affect our revenue and operating results. If our systems and controls are unable to handle online security risks, our business will be adversely affected. Risks Related to Our Acquisition of United Tote United Tote s totalisator business is dependent on its relationships with its track and other partners for a substantial portion of its revenue. The loss of all or a portion of these relationships could result in the failure of Youbet to realize the expected level of revenue from its acquisition of United Tote. United Tote s totalisator business is dependent on the total amount of wagers placed with its track partners. United Tote s totalisator business is dependent upon leading with and responding to technological changes. If we were to lose certain key United Tote employees during our integration of United Tote, our business would likely be adversely affected. Risks Related to the Ownership of Our Common Stock The share price of our common stock may be volatile and could decline substantially.

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814055--3/13/2006--YOUBET_COM_INC