* Increases cost savings to 65 mln pounds from 50 mln
* May seek further deals or return cash to shareholders
* Combined group EBITDA up 31 pct to 181 mln pounds (Adds details on strategy, CEO interview)
By Padraic Halpin
DUBLIN, Aug 24 (Reuters) - Gambling company Paddy PowerBetfair increased the scale and pace of costsavings from its merger, fleshing out its strategy following a31 percent jump in first-half earnings.
Online betting exchange Betfair and Paddy Power, which has achain of shops as well as an online business, completed a 6billion pound ($7.9 billion) merger in February with the initialaim of annual cost savings of 50 million pounds.
It increased that figure to 65 million on Wednesday to befully achieved in 2017, a year ahead of its previous target,adding that the integration of the two companies was alsoprogressing ahead of plan.
There has been a flurry of mergers or attempted deals in theindustry as established bookmakers and newer online start-upsgrapple with higher taxes and tighter regulation.
Casino and bingo hall operator Rank Group and onlinegambling company 888 Holdings last week abandonedefforts to take over William Hill.
Ladbrokes and Gala Coral are pressing ahead with amerger in a sector now catering for a new generation of gamblerswho bet online and have grown up on a rich diet of televisedsport.
DIFFERENT BRANDS
Both Betfair and Paddy Power brands still operate side byside in Britain and Ireland and the company believes it canexploit their different strengths.
The group said on Wednesday it would adopt a more targetedapproach to each, primarily aiming Betfair at "money-centric"customers while Paddy Power will concentrate on customers whoseprimary motivations are "social interaction and entertainment".
Betfair is best known for its innovative exchange wheregamblers can bet directly against each other, while Paddy Powerhas made a name for itself through cheeky advertising campaigns.
Chief Executive Breon Corcoran told Reuters that the Betfairbrand would typically be used for entries into other Europeanmarkets and that the group would focus primarily though notexclusively on regulated markets.
It will also be selective on shop openings, expecting to add10 to Paddy Power's stock of 603 in the second half, making itat most a small buyer of the 350-400 shops rivals Ladbrokes andGala Coral must sell, Corcoran said.
Paddy Power Betfair's speedier integration and strong cashgeneration could see it seek further deals or return cash toshareholders in due course, Corcoran said.
"There are lots of moving parts in the market at the moment.We think we're in a pretty good position to get involved in thatif we so wish," Corcoran, who worked at both firms before theymerged, said in a telephone interview.
The combined group reported core earnings (EBITDA) of 181million pounds in the first six months of the year and said thesecond half had started in line with its expectations, expectingfull year earnings growth of up to 30 percent to between 365million and 385 million pounds.
Shares in the group, up 25 percent since the end of Juneafter more than recovering a hit from Britain's vote to leavethe European Union, were trading 0.2 percent lower at 994.0pence at 0825 GMT.
($1 = 0.7596 pounds)($1 = 0.7564 pounds) (Editing by Jason Neely)
