(Reuters) - Nevada has become the first U.S. state to legalize interstate online poker and allow state-to-state gaming agreements, beating New Jersey to the punch and putting in place a potential nationwide framework for Internet wagering.
Republican Governor Brian Sandoval signed the landmark bipartisan bill into law on Thursday, authorizing his office to enter into agreements with other states that will in effect allow Nevada-based companies to host interactive gambling for residents of other states.
A number of companies have already been granted Nevada licenses for online poker, but were prepared to be limited to serving Nevada residents. Applicants include social gaming leader Zynga Inc. Shares in Zynga leapt as much as 7.4 percent on Friday.
With the bill, Nevada - home to Las Vegas, the world's second-largest gambling hub - wants to pave the way for national Internet wagering even though efforts at federal regulation have stalled. Established companies including MGM Resorts and Wynn Resorts hope they can add new customers and pitch online players to come to Vegas.
"This bill is critical to our state's economy and ensures that we will continue to be the gold standard for gaming regulation," Sandoval said in a statement after signing the bill on Thursday.
The bill removes a provision requiring federal legislation or Department of Justice approval before online gaming licenses are made active, according to Nevada's statement.
Nevada Assembly Majority Leader William Horne, a Democrat from Las Vegas, told Reuters that he expects online poker to be the first of multiple online gambling offerings to residents of other states.
"Initially it'll be starting with online poker, but certainly the infrastructure is set up for various interactive gaming," Horne said.
"There are approximately a half-dozen companies already licensed to do this in our state," Horne added. "We anticipate that to grow significantly."
Horne said it is too early to say how much Nevada, which relies heavily on tourists spending money at its resorts and in its casinos, will see in the way of revenue from its initiative, which relies on compacts with other states.
"We recognize that online gaming worldwide has generated in excess of $5 billion," Horne said. "Going forward we anticipate being competitive in this area."
Nevada's legislation comes as New Jersey - home to Atlantic City - considers a similar move to legalize online gambling. Republican Governor Chris Christie rejected a measure earlier this month that would have allowed Internet gambling, but has said he would consider approving such a law if it was framed properly.
Many industry players hope that a tide of such proposed legislation will sweep through states across the country, opening a massive new online market.
The bills follow a 2011 declaration by the U.S. Justice Department that only online betting on sporting contests broke federal law. That opened the door for states to legalize some forms of online gambling.
Although widespread legalization appears years away at the minimum, obtaining a license in Nevada would be a meaningful start for the nationwide aspirations of entrants such as Zynga, especially if they can offer games to those in other states.
Zynga, which runs one of the world's largest online communities of poker players, is hoping that a lucrative real-money market could make up for a steep slide in revenue from games like "FarmVille" that are losing players but still generate the bulk of its sales.
The Nevada signing came after a joint Judiciary committee hearing on Thursday morning and approval by the legislature in the afternoon.
Reporting by Ian Simpson in Washington, D.C. and Jim Christie in San Francisco; Editing by Joseph Menn, Paul Thomasch and Phil Berlowitz