814055--3/16/2007--YOUBET_COM

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Laws and regulations proposed by Congress and various state legislatures or federal or state authorities that are directly applicable to online and Internet gambling could have a material adverse effect on our business. If credit card companies, as a policy, refuse to process wagering account transactions as a result of 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 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. 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, or restricts domestic service providers, our business could be adversely affected. Our inability to retain our relationships with our content providers would have a material adverse effect on our business. Our inability to retain our core customer base or our failure to attract new customers would have a material adverse effect on our business. The integration of acquired businesses 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 or without service interruptions, 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 fluctuate seasonally and may be adversely impacted by a reduction in live racing dates as a result of regulatory factors. If the horse racing tracks that we carry experience unfavorable weather, it may cause races to be cancelled which would reduce our revenue and cause our 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. The inability of our systems and controls to handle online security risks would have a material adverse effect on our business. Our inability to collect revenue due to the NYRA bankruptcy could reduce our revenue and cause our businesses to suffer. Additional Risks Related to United Tote United Tote s totalizator business depends 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 to realize the expected level of revenue from our acquisition of United Tote. United Tote s totalizator business depends on the total amount of wagers placed with its track partners. United Tote s totalizator business depends upon leading with and responding to technological changes.

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814055--3/16/2007--YOUBET_COM_INC