AUBURN, Wash. – An Internet gambling company accused of illegally taking millions of dollars in bets from Washington residents has been granted a state license after agreeing to pay up at least partly.

A license for Youbet.com of Woodland Hills, Calif., to accept online bets on horse races around the country from people in the state was approved 4 to 0 Thursday by the Washington State Horse Racing Commission with one member absent.

In exchange, Youbet.com must give the state’s horse racing industry a cut of each bet and pay the state $400,000 for wagers that state officials say the company accepted illegally last year.

The company is the third to receive a license for “advanced deposit wagering” since that version of online gambling on horse races was authorized by the Legislature last year. Before then all forms of Internet gambling were banned in the state.

Sixteen other states have laws restricting or regulating Internet gambling.

Investigators believe Youbet.com has been receiving about $12 million a year in bets placed from Washington state, but the payback provision shows the panel is not rewarding or ignoring illegal conduct, commission Chairman Gary Christenson said.

“It’s almost the opposite. By giving (Youbet.com) a license, we are insuring that the state of Washington is getting the money that’s due it. If we didn’t give them a license, it wouldn’t guarantee that they’d stop,” Christenson said. “We didn’t turn a blind eye because we did include their need to pay us back.”