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The Associated Press May 19, 2011, 7:45PM ET

Nev. Assembly OKs stripped-down online poker bill

The state Assembly on Thursday passed a stripped-down Internet gambling bill calling for the state to develop a licensing process for online poker businesses, a month after the U.S. industry melted down amid federal indictments.

Members of the Assembly unanimously passed the measure, which calls on Nevada regulators to design rules that would only take effect after the federal government legalizes online gambling. It now goes to the Senate, and the sponsor said he expects it will pass on that side.

Online gambling has been mired anew in controversy since the U.S. Justice Department indicted executives of three top online poker sites April 15, charging them with violating federal law. The sites have been shut down to U.S. players.

"It highlights that there's a need," said Assemblyman William Horne, D-Las Vegas, whose committee sponsors the bill. "Where there's a void of regulation, there's corruption."

The bill was backed by PokerStars, one of the companies targeted by the federal government, and originally called for the legalization of online poker in Nevada. Sponsors wanted Nevada to capitalize on an industry that has been operating in a legal gray area since the federal government effectively banned online gambling in 2006.

But a policy committee took out the boldest elements of the bill four days before the federal indictments became public.

Now, the bill calls for the Nevada Gaming Commission to develop regulations and a path to licensure for online gambling businesses by January 2012 and keep them in the can so they're ready "the day the (federal) law passes," Horne said.

It also stipulates that online sites would need to have a partnership with an existing non-restricted gambling license holder or an affiliate that has been in business for at least five years.

The founder of PokerStars was among 11 people charged last month with bank fraud, money laundering and operating illegal gambling businesses. The indictments charge executives at PokerStars, Full Tilt Poker and Absolute Poker and their associates with defrauding banks into processing illegal gambling transactions.

PokerStars, based in the Isle of Man, also contributed $272,000 to Nevada political campaigns in apparent violation of federal law, according to campaign finance disclosures first reported by the Las Vegas Sun. Most Nevada lawmakers and other officials say they were unaware of the company's foreign status and have since returned contributions.

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