Online gambling firm Bwin.Party at centre of $1.7 bln bid battle

* GVC, Amaya (Other OTC: AMYGF - news) 1.5 bln euro bid of cash and GVC shares - source

* 888 Holdings approaches Bwin.Party with cash and stock offer

* Raises prospect of bidding war between rival parties (Adds GVC-Amaya joint bid details, analyst comment, updates share movement)

By Esha Vaish

May 18 (Reuters) - London-listed online gambling company Bwin.Party Digital Entertainment was at the centre of a $1.7 billion takeover battle on Monday as its competitors circled with rival bids.

GVC Holdings Plc (LSE: GVC.L - news) is preparing to make a 1.5 billion euro ($1.7 billion) offer in partnership with Canada's Amaya Inc , consisting of cash and GVC shares, a source close to the matter told Reuters.

This sets the stage for a potential bidding war with 888 Holdings Plc, which earlier on Monday offered to buy Bwin for an undisclosed sum in cash and shares.

Consolidation in the gambling industry had been anticipated as higher taxes and tougher regulations in Britain and other major European markets have been hurting companies.

Shares (Frankfurt: DI6.F - news) in Bwin - which put itself on the block last year - were up 7.5 percent at 107.07 pence at 1256 GMT, making them the second-largest gainer on the FTSE-250 Midcap gainers list

GVC, like 888, is London-listed. It said on Friday that it had bid for Bwin, but did not disclose details.

GVC has a market value of about $440 million, 888 of roughly $947 million and Amaya of around $3.6 billion.

Teaming up with Amaya would give GVC the necessary cash to take on bigger rival 888, which offers casino, poker and bingo games and is on the hunt for acquisitions.

Such a deal could be similar to GVC and William Hill (Other OTC: WIMHF - news) 's joint takeover of Sportingbet in 2013, when the British bookmaker took control of Sportingbet's Australian and Spanish operations, leaving GVC with the rest of the business.

"Amaya might come and be prepared to write a much bigger cheque, even though I think the synergy benefits would be bigger for 888," Peel Hunt analyst Nick Batram said.

Shares in Isle of Man-based GVC were marginally up at 461.2 pence, while 888 shares were down 3.5 percent at 163.75 pence.

Amaya, which last year bought online gambling sites PokerStars and Full Tilt Poker, was not available for comment outside of regular business hours in Canada.

Gibraltar-based 888, which ended talks on a takeover by William Hill Plc earlier this year, said shareholders with an about 59 percent stake backed its offer. That would indicate support from the family trusts linked to the firm's Israeli founders.

Bwin said its board and advisers were conducting a detailed review of the proposals received.

($1 = 0.6380 pounds; $1 = 0.8775 euros; $1 = 1.2056 Canadian dollars)

(Reporting by Esha Vaish in Bengaluru; Editing by Keith Weir and Pravin Char)