LONDON (Reuters) - Online gambling exchange Betfair said it would withdraw from the Greek market until there was greater clarity on gaming regulation in the country.

Betfair, which has not yet applied for a permit to operate in Greece, questioned the cost and conditions attached to permits required by gaming firms to trade in the country.

"According to legal advice received, the value of these permits is unclear and we consider the gambling legislation in the country to be inconsistent with European law," Betfair said on Monday.

"The associated fiscal conditions attached to these permits, which may include payment of taxes on historical revenues, make the market economically unattractive."

Earlier this month the Greek Gaming Commission said gambling firms operating in Greece without a permit would face financial penalties and criminal sanctions.

Betfair said it believes there are "significant issues with the legality of this decision" by the Greek Gaming Commission.

It added that it was disappointed the European Commission had not moved to prevent what Betfair calls "protectionist behavior."

Earlier this month Betfair, which launched 12 years ago and operates an exchange system that allows gamblers to bet against each other rather than the bookmaker, withdrew its online sports betting exchange in Germany because of a tax levied on stakes on sports events from July 2012.

The European Commission last month said it was not proposing EU-wide legislation to regulate online gambling.

Prior to Betfair's decision to withdraw from the market, it had been expected to generate 13 million pounds ($20.81 million) of revenue from the Greek market in the current financial year.

($1 = 0.6246 British pounds)

(Reporting by Rhys Jones; editing by James Davey)