FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

Exhibit 10.16

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “ Amendment ”), dated as of March 14, 2007, is entered into by and between WELLS FARGO FOOTHILL, INC. , a California corporation, as arranger and administrative agent (in such capacity, “ Agent ”) for the Lenders (as defined below), YOUBET.COM, INC. , a Delaware corporation (“ Parent ”), and UNITED TOTE COMPANY , a Montana corporation (“ United Tote ”, and together with Parent, each individually a “ Borrower ”, and individually and collectively, jointly and severally, the “ Borrowers ”).

RECITALS

A. Borrowers, the lenders signatory thereto (the “ Lenders ”) and Agent have previously entered into that certain Credit Agreement dated as of July 27, 2006 (as the same has been or may be modified, supplemented, restated or amended from time to time, the “ Credit Agreement ”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrowers. Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

B. Certain Events of Default have occurred and are continuing under the Credit Agreement due to: (i) the Borrowers’ failure to achieve, when measured for the six month period ended December 31, 2006, the minimum EBITDA required under Section 6.16(a) of the Credit Agreement; and (ii) the Borrowers’ failure to achieve, when measured for the fiscal year of the Borrowers ended December 31, 2006, the minimum Free Cash Flow required under Section 6.16(b) of the Credit Agreement (collectively, the “ Known Existing Defaults ”).

C. Borrowers have requested that Agent and the Lenders waive the Known Existing Defaults and further amend the Credit Agreement, all of which Agent and the Lenders are willing to do pursuant to the terms and conditions set forth herein.

D. Borrowers are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Credit Agreement are being waived or modified by the terms of this Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.  Amendments to Credit Agreement .

(a) The definition of “EBITDA” set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“ ‘ EBITDA ’ means, with respect to any fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or loss) (as adjusted for non-cash stock option expenses), minus extraordinary gains and interest income, plus (i) interest expense, (ii) income taxes, (iii) depreciation and amortization for such period, (iv) for any fiscal period ending on December 31, 2006, March 31, 2007, June 30, 2007, an aggregate amount of $4,330,705 on account of certain expenses previously approved by Agent, and (v) for any fiscal period ending on September 30, 2007, an aggregate amount of $3,194,509 on account of certain expenses previously approved by Agent; in each case, determined on a consolidated basis in accordance with GAAP.”

(b) Section 6.16(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(a) Minimum EBITDA. Fail to achieve EBITDA, measured on a fiscal quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Amount		Applicable Period
$2,000,000		For the 3 month period ending September 30, 2006
$4,000,000		For the 6 month period ending December 31, 2006
$6,000,000		For the 9 month period ending March 31, 2007
$11,000,000		For the 12 month period ending June 30, 2007
$11,000,000		For the 12 month period ending September 30, 2007
$13,000,000		For the 12 month period ending December 31, 2007
$13,000,000		For the 12 month period ending March 31, 2008
$13,000,000		For the 12 month period ending each fiscal quarter-end thereafter”

2.  Waiver of Known Existing Defaults . Agent and the Lenders hereby waive enforcement of their rights against Borrowers arising from the Known Existing Defaults;

provided , however , nothing herein shall be deemed a waiver with respect to any other or future failure of Borrowers to comply fully with Section 6.16(a) and Section 6.16(b) of the Credit Agreement. This waiver shall be effective only for the specific defaults comprising the Known Existing Defaults, and in no event shall this waiver be deemed to be a waiver of enforcement of Agent’s or any Lender’s rights with respect to any other Defaults or Events of Default now existing or hereafter arising. Nothing contained in this Amendment nor any communications between any Borrower and Agent or any Borrower and any Lender shall be a waiver of any rights or remedies Agent or any Lender has or may have against any Borrower, except as specifically provided herein. Except as specifically provided herein, Agent hereby reserves and preserves all of its and the Lenders’ rights and remedies against each Borrower under the Credit Agreement and the other Loan Documents.

3.  Conditions Precedent to Effectiveness of this Amendment . This Amendment shall not become effective until all of the following conditions precedent shall have been satisfied in the sole discretion of Agent or waived by Agent:

(a)  Amendment; Acknowledgement . Agent shall have received this Amendment fully executed by all parties hereto.

(b)  Representations and Warranties . The representations and warranties set forth herein shall be true and correct.

4.  Release; Covenant Not to Sue .

(a) Each Borrower hereby absolutely and unconditionally releases and forever discharges Agent and each Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing (each a “ Released Party ”), from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Borrower has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. It is the intention of each Borrower in providing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified, and in furtherance of this intention it waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California, which provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MIGHT HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

Each Borrower acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of acti