German tax provision deals 888 a losing hand

(Adds details, shares, CEO quote)

Sept 5 (Reuters) - British online betting company 888 Holdings swung to a half-year loss because of charges for tax provisions in Germany and a financial penalty imposed by the UK Gambling Commission.

However, revenue rose 9 percent to $270 million in the six months to the end of June on the continued strength of its casino and sports betting business.

The group, which operates 888 casino, poker, sport and bingo brands, reported a loss before tax of $17.3 million for the six months, reversing from a profit of $27.8 million last year.

The company took an exceptional charge of $50.8 million, including a $45.3 million charge related to potential value added tax (VAT) on services in Germany prior to 2015.

Last week, 888 was fined a record 7.8 million pounds ($10.1 million) for failing to protect vulnerable customers at risk of gambling addiction.

888 also warned that the expansion of gaming duty on casino, poker and bingo free bets in Britain will increase the cost base for operators in the UK.

"Whilst the industry will continue to face regulatory headwinds in the second half of the year..., trading in Q3 has started well and in line with the board's expectations." Chief (Taiwan OTC: 3345.TWO - news) Executive Itai Frieberger said in a statement.

Revenue at its casino and sports divisions rose 11 percent and 35 percent respectively with the latter performing strongly in Italy.

Shares (Berlin: DI6.BE - news) in the company were up 1.3 percent at 267p at 0835 GMT. The gambling sector is seen ripe for further consolidation, with the outcome of a review of betting machines in high street shops seen as the likely trigger.

Last year, Gibraltar-based 888 and casino operator Rank Group Plc pursued a deal for William Hill (Frankfurt: 633847 - news) . However, William Hill rejected the takeover proposals. ($1 = 0.7740 pounds) (Reporting by Rahul B in Bengaluru; editing by Jason Neely/Keith Weir)