LONDON, Nov 28 (Reuters) - British bookmaker Ladbrokes said on Wednesday it had started taking online bets from Italian punters, the latest step in its expansion into the country.

The head of the firm's Italian business Mattia Nicelli told Reuters 700 to 800 people were now betting on the site.

Italy is slowly opening up its gambling market and although the government still decides which kinds of bets are allowed, fixed-odds betting on things like soccer matches and horse racing have now been introduced.

Around 95 percent of bets in Italy are on soccer matches.

Ladbrokes has 100 million euros ($147.3 million) to spend on expansion into the country and plans to have 62 shops offering both sports and horse racing betting, plus another 51 betting kiosks in places like bars and cafes, in time for next summer's Euro 2008 finals.

Ladbrokes has said it will make 20 to 40 million pounds from its new Italian and Spanish businesses.

"We will make money in Italy," said Nicelli. "I'm not allowed to lose money," he added, refusing to give a forecast.

Betting firms received a big boost at the end of last year when the Italian government upped the number of lucrative slot machines betting shops were allowed from eight to 24, but fickle government opinion towards gambling in Italy can make the market a volatile bet for operators.

Nicelli said the firm was considering using some of its licenses to open amusement arcades rather than betting shops in order to make the most of the floor space in its shops.

Ladbrokes' UK rivals William Hill and Coral are also in the process of opening shops in Italy.