(Changes sourcing, adds share movement and background)
By Mamidipudi Soumithri and Shivam Srivastava
Aug 20 (Reuters) - British online gambling company GVCHoldings Plc may increase its offer for rival Bwin.partyDigital Entertainment Plc for a third time, a sourceclose to GVC said on Thursday.
The source said GVC and Bwin had been in talks over the pastweek and that Bwin's response had been "very positive".
The talks centred around synergies between the twocompanies, according to the source, who declined to beidentified because the matter is confidential.
The Times newspaper reported earlier on Thursday that GVC isready to increase its offer to at least 130 pence per share, orabout 1.1 billion pounds ($1.7 billion).
Bwin last month rejected GVC's initial 908 million poundoffer in favour of a 900 million pound offer from rival 888Holdings Plc.
Bwin said 888's offer carried fewer risks and had betterprospects.
GVC has since raised its offer twice, first to about 1billion pounds and then to about 1.03 billion pounds.
The Times said Bwin's board is scheduled to meet on Thursdayto decide on GVC's increased offer. The board is expected togive 888 a grace period to make its own enhanced offer if itchooses GVC. (http://thetim.es/1J5gf56)
Bwin was not available for comment.
The tussle for Bwin is the latest in a flurry of mergeractivity in the industry, a trend likely to continue as firmsseek to expand to offset increasing taxes and tighter regulationin Britain.
Shares in Bwin were up 1 percent at 114.7 pence at midday onthe London Stock Exchange, while GVC was unchanged at 427.5pence.
($1 = 0.6390 pounds) (Editing by Lisa Shumaker and Maju Samuel)