SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>youbet.txt
<DESCRIPTION>CORRESPONDENCE/COMMENTS TO 8-K
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                             [YOUBET.COM LETTERHEAD]

                               September 22, 2004

VIA FACSIMILE and EDGAR

Beverly A. Singleton
Staff Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.

             Re:  Youbet.com, Inc.
                  Form 8-K (Item 4.01), filed August 24, 2004 Form 8-K
                  (Item 4.01), As Amended, filed September 1, 2004 File
                  No. 0-26015

Dear Ms. Singleton:

         We have received your comments to the above referenced Form 8-K, as
amended, in a letter dated September 16, 2004 and addressed to Charles Champion,
President and Chief Executive Officer of Youbet.com, Inc. The remainder of this
letter contains the text of your comments followed, in each case, by our
response, as well as certain requested acknowledgements.

1.  We note the disclosure in the Item 4.01 From 8-K/A and by BDO Seidman,
    LLP in the Exhibit 16 letter to the Item 4.01 Form 8-K that there was a
    disagreement pertaining to the propriety of capitalizing consulting
    expenses incurred during the second quarter of 2004. We also note the
    disagreement had been ultimately resolved by recording an adjustment.
    Supplementally provide us with a detailed description of the nature of
    the transaction, how you initially recorded the transaction, BDO
    Seidman, LLP's proposed accounting, the actual amounts involved, and
    the reasons why you believe that the accounting for this transaction
    now complies with GAAP and does not affect any previous of subsequent
    accounting period. Please provide specified reference as to the
    accounting literature applied.

RESPONSE

The transaction at issue involved a consulting engagement with The Monitor Group
("Monitor") to perform a pricing analysis during April, 2004. After extensive
research, Monitor made specific recommendations on how to modify our existing
subscription and loyalty programs to improve profitability and customer
retention. The cost of this engagement was $150,000. Based upon Monitor's
recommendations, our engineering department revised its programming and
development process to implement Monitor's recommendations. We expect to
generate additional revenues this month, following deployment of the new
pricing structures and loyalty programs recommended by Monitor. Accordingly,
the accounting question was whether the cost of Monitor's engagement qualified
under GAAP as a deferred asset or whether it should be treated as a current
period expense.

Based on GAAP's matching principle, it seemed consistent and logical that the
Monitor expense should be matched with the additional revenue generated from
implementation of the Monitor recommendations. Therefore, we considered it
appropriate that the cost of Monitor's engagement, since it was directly
related with the incremental revenues that we expected to realize in September,
should be deferred until those costs could be matched with the associated
revenues.  Youbet initially recorded this expenditure as a deferred asset in
the 2nd quarter, expecting to fully expense the deferred asset in the 3rd
quarter.

During the fieldwork for their 2nd quarter review, BDO Seidman LLP ("BDO")
proposed that the appropriate treatment of the Monitor fee was to treat the
payment as a research & development ("R&D") expense in April. BDO provided
documentation and analysis substantiating this point of view prior to the July
29, 2004 meeting of Youbet's audit committee. More specifically, Financial

<PAGE>

Beverly A. Singleton
September 22, 2004
Page 2

Accounting Standard 2 ("FAS 2") requires that an expense be recorded in the
period that the work was performed. BDO acknowledged that recording the cost
of the Monitor engagement as an R&D expense would inherently cause the revenues
and expenses to fall in different periods; however, BDO believed that the
application of FAS 2 overrules GAAP's matching concept in this case.

We adopted the approach advocated by BDO and expensed the $150,000 in April,
prior to our July 29, 2004 audit committee meeting, which also pre-dated the
release of our 2nd quarter earnings and filing of our Form 10-Q. We believe
that the accounting for this transaction complies with GAAP because FAS 2
clearly requires R&D expenses to be expensed in the period incurred. Based on
BDO's analysis and recommendation to treat the Monitor fee as an R&D expense,
it was appropriate for Youbet to expense the $150,000 in April. Monitor's
engagement was a one-time event that took place in April 2004, and since this
accounting treatment was adopted prior to any public release of 2nd quarter
results, the change does not affect any publicly reported results, including
those for any previous periods.

2.  Provide us with copies of all written reports, letters or
    communications from BDO Seidman, LLP to you concerning this
    disagreement as to the appropriate accounting treatment. Also, we note
    the Exhibit 16 letter to the Item 4.01 Form 8-K indicates BDO Seidman,
    LLP communicated the disagreement as part of its presentation to your
    Audit Committee on July 29, 2004. Please provide us with a copy of this
    written communication, if any.

RESPONSE

The following is an excerpt from BDO's presentation to the audit committee on
July 29, 2004, which is the only written documentation (other than FAS 2)
provided by BDO concerning the purported disagreement:

    "We received management cooperation. We had no disagreements with
    management regarding the review procedures, accounting estimates, or
    disclosure matters that could be significant to the June 30, 2004
    consolidated financial statements. We disagreed with management
    regarding the capitalization for costs incurred for consulting services
    provided by Monitor. We have established the facts underlying the
    accounting transaction, reviewed management's application of GAAP and
    have concluded the accounting transaction was not recorded in
    accordance with GAAP. Accordingly, we have proposed an adjustment to
    correct the accounting for the transactions. Management recorded this
    adjustment."

BDO's complete presentation is being provided to you as supplemental
information only in accordance with Rule 12b-4 under the Securities Exchange
Act of 1934, and we respectfully request that such supplemental information be
returned to us once your review is complete.

3.  Also, it appears that the Exhibit 16 letter relates to the original
    Item 4.01 Form 8-K filed on August 24, 2004. Please file a new Exhibit
    16 letter for the Item 4.01 Form 8-K/A filed on September 1, 2004,
    which includes disclosure of the disagreement.

RESPONSE

Please note that we have been working with BDO on transitioning to our new
independent accountants, and BDO continues to provide certain tax preparation
and other services to us on a regular basis. At no point has any representative
of BDO expressed, verbally or in writing, any concern or disagreement with our
Form 8-K/A disclosure. In fact, the Form 8-K/A disclosure is consistent with the

<PAGE>

Beverly A. Singleton
September 22, 2004
Page 3

Exhibit 16 letter filed with the Form 8-K/A and merely provides certain
immaterial timing and procedural details, as well as a relative quantification
of the expenses involved to give investors the proper perspective. As
demonstrated in our response to comment 1 above, the amount involved was not
material and the disagreement did not affect any reported results, as the issue
was raised and resolved in the 2nd quarter. Accordingly, we respectfully submit
that requiring BDO to furnish an additional Exhibit 16 letter would not provide
investors with meaningful additional information, and may be in fact confusing
in light of the time that has passed and the relative immaterial nature of the
fee involved.

                                   * * * * *

    As requested, Youbet hereby acknowledges that:

    --   We are responsible for the adequacy and accuracy of the disclosure in
         our SEC filings;

    --   SEC staff comments or changes to disclosure in response to such
         comments in the filings reviewed by the staff do not foreclose the
         SEC from taking any action with respect to any such filing; and

    --   Youbet may not assert staff comments as a defense in any proceeding
         initiated by the SEC or any person under the federal securities laws
         of the United States.

         If you have any questions regarding our responses, please do not
hesitate to contact me at (818) 668-2274.

                                   Sincerely,

                                   /s/ Charles R. Bearchell
                                   Charles R. Bearchell
                                   Chief Financial Officer

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