Online Wagering a Legal Business? That May Be a Gamble - TheStreet

Online Wagering a Legal Business? That May Be a Gamble

Cramer's blown away by Youbet.com's latest press release.
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U want ugly? U should hit up

Youbet.com

(UBET)

.

Here's one of those Net stocks that captured the nation's fancy during that May-June time frame when the Net was busy curing cancer and solving the world's hunger problems.

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Youbet.com is an online wagering company that got a visit from the Los Angeles County District Attorney's office last week. The government, it seems, is trying to figure out if the company is a legal business.

This is the type of stuff I was talking about this weekend with my State of the Web

piece. Here's a company that may not even have the right to be a company and yet it came public anyway. Shouldn't the company have gotten a no-action letter from the authorities? I know, the cops don't give those, but I would have figured that, before it came public, it ought to have passed some sort of legal muster.

(This travesty makes it more than likely that "TheStreet.com" guest Frank Curzio won't make much on

Churchill Downs

(CHDN) - Get Report

if he is banking on online wagering.)

I have seen a lot of companies get tripped up by revenue misses and earnings misses, but I can't recall any that may simply be illegal operations. This one takes the cake.

But they have not lost their promotional spirit at Youbet.com. Check out the release these guys issued about this: "Youbet.com, Inc., the leading global online live-event wagering company, today announced that it has provided records in cooperation with a search warrant served by the Los Angeles Country District Attorney."

Nothing like trying to get a good word in smack at the top of a really bad release.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.