UPDATE 1-Industry veteran Smith appointed chairman of Tote

(Adds quotes from sports minister, background)

LONDON, June 30 (Reuters) - Britain named gambling industry veteran Mike Smith chairman of the Tote on Monday as it seeks a buyer for the state-owned bookmaker.

In a statement the Department for Culture, Media, and Sport (DCMS) said aside from his betting industry experience, Smith has significant experience of mergers and acquisitions including the purchase of William Hill by Mecca, the purchase and sale of Coral by Ladbrokes and the acquisition of Blue Square by Rank.

Smith is a former chief executive of Ladbrokes Plc (LAD.L: Quote, Profile, Research) and Rank Group Plc (RNK.L: Quote, Profile, Research), and was managing director of William Hill Plc (WMH.L: Quote, Profile, Research).

The British government appointed U.S. investment bank Goldman Sachs (GS.N: Quote, Profile, Research) to run an auction for the Tote in April following years of deliberation and having gone back on its original commitment to sell it to the horse racing industry.

The government is now planning to return half the profits from the sale to the industry, but could face barriers to the plan in the form of European regulators if they consider such a move to constitute state aid.

The Tote, which has 540 shops, had been valued at more than 400 million pounds ($797.6 million) prior to the credit crunch but analysts now reckon it could be worth as little as half that amount.

Gala Coral has expressed an interest in buying the business outright but would require backing from its private equity owners Candover (CDI.L: Quote, Profile, Research), Cinven [CINV.UL] and Permira [PERM.UL].

Meanwhile, Sportech (ROD.L: Quote, Profile, Research) is interested in the Tote's pool betting operations. (Reporting by Matthew Scuffham; Editing by Quentin Bryar and David Holmes)