If you think this "scourge" is going away, think twice.

Here's some excerpts from Youbet's May/06 conference calls. You have to read between the lines. Like saying the CRW whales don't win all the time...yea, right thats because they are grinders using historical probabilities....over time they win (big!, especially with the benefit of rebates) because of their unfair advantage of timing and access.

How many times have you tried to bet at the last possible minute only to be shutout or see the odds change against you after you bet. The tracks let these guys bet thousands at the last second and, in addition, let them electronically access the track's tote system to calculate the correct amount to bet ,for example, on each exacta combination that is more than their model determines is historically correct. As someone suggested, one possible way to screw up these systems is to require them to process their bets a couple of minutes before the pools close...I think the end result if this rule was instituted would be they wouldn't bet anymore. These guys are not horseplayers!!! Asfufh

Youbet.com Q1 2006 Earnings Conference Call Transcript (UBET)
Related Stocks: UBET


Youbet.com (UBET)
Q1 2006 Earnings Conference Call
May 4, 2006, 9:00am Eastern

Executives

Richard Land, Investor Relations Counsel
Chuck Champion, Chairman, President and CEO
Gary Sproule, CFO
Scott Solomon, General Counsel
Lonn Powell, VP Public Affairs.

Analysts

Ryan Worst, Brean Murray, Carret & Co.
Mark Agento, Craig-Hallum Capital
Todd Eilers, Roth Capital Partners
Traci Mangini, Think Equity Partners
Steve Altabrando, Sudotee and Company

Presentation/Champion:

Also, we’re in the process with the ORC, Oregon Racing Commission, in testing CRW. CRW is Computer Robotic Wagering. We’re working on an individual basis with tracks a well. What CRW allows is high end individuals to place bets in a paramutual pool through the same type of transparent compliant systems that others do. They don’t have any incremental access to data. Obviously their bets have to be taken like everyone else’s prior to post. We’re scrutinizing and watching that business very carefully. By allowing this process to take place we’re attracting larger bettors to the pools. We think it’s going to be very positive in the long run and we’re working on that test. We expect that at the completion of that test in June we should be having CRW integrated in our overall operating plan in Oregon and will be offering it to others.


Q&A:
Traci Mangini.

And then just lastly on the CRW system, the robotics wagering. If you could give a little more detail on the mechanics of how that system works. I’m assuming that it’s going to diversify your high volume customer, maybe make more of a younger demographic than say your Wales and IRG. Is that correct?

Chuck Champion.

Actually, I’m not sure about the demographic mix. A couple of individuals that we’ve talked to about this and are engaged in it are frankly not 22 years old, they’re probably 45-50 years old. Basically, what the system allows is that a person using mathematical formulas looks at all of the race data available and handicaps each and every horse on a statistical basis and then determines, based on these statistics, exactly what the horse should go off at, and the monitors that up until about 2 minutes before the pools close and make bets, makes a bet into the pool where they believe value exists. It’s really, in some senses it’s not different than what another handicapper will do. It’s crunching a lot more data a lot more quickly and then giving the individual the opportunity to place a number of bets fairly quickly. Again, they’re not batch bets, they’re individual transactions. We don’t allow anyone to batch 50 bets and send them in. we don’t allow an individual to collect bets from other people and then send them in. this is something that comes off of their computer programs and they have to place the bets.

We’ve given the individual the technology in order fro them to do that and also maintain full transparency into what they’re doing, how they’re doing it, track each and every piece of their business. But, it’s basically individuals that are not your ordinary handicapper, if you will. They’re not individuals that have been around horses and racing all their life. These are guys for the most part that are extremely intelligent, well-educated and have spent time in the mathematically world and in the gaming world, as well, playing skill-based games. One individual, for example, is a chess master and a backgammon champion and he’s got the most amazing mathematical mind one can meet. He’s developed programs that find the value in the pools and he places bets against them. He doesn’t win all the time, by the way. So it’s not like it’s a foolproof system where the guy places the bet and he’s absolutely sure he’s going to win. He just improves his chances because of all the statistical information that he can crunch. But he’s getting no different statistical information than anyone else in the industry has access to. So, he doesn’t have a special advantage from that standpoint. He’s getting his information from the same data providers that everybody else is. He’s just doing it in a faster way and with different types of programs that he’s written.

Others do the same thing, their programs are just slightly different. They are very large players. They add liquidity to the pool because, again, they don’t win all the time. They have better percentages, but they don’t win all the time. So when other handicappers figure out one horse is better than another, there’s usually greater odds spreads. So those individuals who really figured out when the big guys lose, they’re usually rewarded to a greater extent. And that’s why we think it’s positive for the pools. But we also believe it’s up to each track to decide. Each track is making the decision as to whether or not they want computer robotic wagering in the pools or not. So we turn it on at certain places and it’s turned off at others. It’s part of the conversations we have with the track.