UPDATE 1-Bwin Q2 core earnings up, but costs bite

(Adds detail, background, wraps CEO on outlook)

VIENNA, Aug 21 (Reuters) - Austrian Internet bookmaker bwin Interactive Entertainment (BWIN.VI) posted a 7 percent rise in second-quarter core earnings on Thursday, as high costs ate into revenue boosted by betting on the Euro 2008 soccer championship.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 10.6 million euros ($15.7 million) in the quarter to June, as gross gaming revenue grew 36 percent to 102.7 million euros, bwin said.

Sports betting revenues increased most, by 58 percent, mainly thanks to the Euro 2008. But the company hiked its marketing spending by almost 50 percent to 37.6 million euros during the quarter, which offset some of the higher revenues.

"Bwin continues to struggle with a cost issue," said Sal. Oppenheim analyst Paul Hoffmann in a note to clients. "The very good top-line growth has been eaten up by rising costs."

Shares in the group, which also offers online poker and games, fell as much as 6.5 percent to five-week low of 15.75 euros on the results. They have lost 40 percent since the beginning of the year.

Chief Executive Norbert Teufelberger said in a webcast presentation he felt comfortable with analysts' forecast for 2008 core earnings, shown on presentation slides as 76 million euros, and would give more detailed guidance with third-quarter results in November.

"As of today we are feeling comfortable with analysts' consensus estimates for gross gaming revenues and EBITDA," Chief Executive Norbert Teufelberger said in a presentation broadcast over the Internet. (Reporting by Boris Groendahl, editing by Will Waterman)