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Bankrupt; TechNews

Youbet.com in American Wagering race

by Jonathan Berke
559 words
7 October 2004

TheDeal.com
English
Copyright (c) 2004 The Deal LLC

The gaming site has bid $9.5 million for the bankrupt operator of Leroy's Horse and Sports Place.

Youbet.com Inc. looks to take bankrupt American Wagering Inc. virtual.

The publicly traded online gaming site made a $9.5 million bid Wednesday, Oct. 6, to acquire American Wagering as part of a proposed reorganization plan after the exclusivity rights of the Las Vegas-based operator of the Leroy's Horse and Sports Place betting chain had expired.

Youbet.com now joins Casino Fortune as online gamers looking to make a bigger name for themselves in the casino world through acquiring hard assets. Casino Fortune recently made a $400 million offer to recapitalize Trump Hotels & Casino Resorts Inc.

Visitors to Youbet.com already wager on horse racing, which the Leroy's Horse and Sports Place chain televises in different casinos, among other sporting events.

"It's the next logical step," said Victor Gallo, the general manager of Youbet Nevada, the company formed to run American Wagering.

Youbet.com will go before Judge Gregg Zive of the U.S. Bankruptcy Court for the District of Nevada in Reno on Tuesday to seek approval on the disclosure statement for its plan for American Wagering.

Then Zive will convene a confirmation hearing on Feb. 14, 2005, to vet Youbet.com's plan as well as any others submitted for the company.

American Wagering's debtor counsel, Gordon & Silver Ltd. in Las Vegas, was unavailable for comment.

Youbet.com is offering $4.75 million in cash and $4.75 million in stock to acquire American Wagering. The offer would exceed the $6.5 million bid made by Las Vegas developer Vincent Schettler.

Leroy's now controls 48, or 30%, of the 160 so-called wagering books in Nevada but has little or no presence in casinos run by major companies such as Caesars Entertainment Inc. and MGM Mirage Inc.

American Wagering filed for Chapter 11 protection on July 8, 2003, to stave off paying Michael Racusin a $1.328 million settlement. Racusin took the company to court after it didn't pay him a $2 million fee for advising it on its initial public offering more than 10 years ago.

Schettler, another unsecured creditor of American Wagering, offered to use $6.5 million to pay off Racusin and buy out the company.

The company's controlling Salerno family, too, has filed a plan. It centers on the company remaining in the hands of the existing shareholders.

American Wagering lost its exclusivity rights Sept. 27, paving the way for so many competing plans.

Youbet.com's offer would provide the company's preferred and common shareholders with a combination of cash and stock on their claims, while its unsecured creditors would get paid in full on their claims.

Youbet.com intends to renegotiate the employment contracts held by American Wagering's CEO, Victor Salerno, and his CFO, Timothy Lockinger, as part of the proposed deal, according to Gallo.

Racusin, meanwhile, awaits a decision by the U.S. Court of Appeals for the 9th Circuit in San Francisco on his situation.

Should Racusin win the appeal, he would receive $2.8 million over 60 months. If he doesn't, he would get $1.32 million over 12 months. - http://www.TheDeal.com

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