Letter of Intent (LOI) for Buying or Selling an iGaming Business

The short answer

A letter of intent (LOI) sets out the main terms on which a buyer proposes to acquire a business: price, structure, what is included, the conditions, and the timetable to closing. It is signed after the buyer has read the CIM and before full due diligence. Most of it is not legally binding, but a few clauses are, usually confidentiality, exclusivity and costs.

The LOI is where the deal is really shaped. Points left vague at this stage, such as how much is paid at closing, what the earnout is based on or which consents are conditions, tend to be renegotiated later, when the seller has less leverage. A good iGaming LOI is specific about the licence, the payment accounts and the asset list, as well as the price.

What an iGaming LOI contains

Binding and non-binding parts

Most of an LOI is an expression of intent. Either side can walk away from the commercial terms until the purchase agreement is signed. A few clauses, however, are binding from the moment the LOI is signed:

• Confidentiality. Both sides keep the terms and the information exchanged confidential.
• Exclusivity. The seller does not negotiate with other buyers for the agreed period.
• Costs. Each side pays its own advisers, unless a breach of exclusivity triggers a cost-recovery clause.
• Governing law and disputes. Which law applies to the binding clauses.
• No announcement. Neither side announces the deal without the other’s consent.

Because the price is not binding, the real protection for a seller is a specific LOI, a short diligence period and a short exclusivity period. The more precisely the terms are written, the harder they are to reopen.

The legal effect of an LOI depends on its wording and the governing law. Ask your lawyer to check which clauses are binding before you sign.

iGaming conditions to include

These are the conditions that most often decide whether an iGaming deal closes. Name them in the LOI, so both sides know from the start what has to happen.

• Regulatory approval. For a share deal of a licensed operator, completion conditional on the regulator approving the new owners. State who files, when, and the long-stop date if approval has not arrived.
• White-label or platform consent. For a white-label brand, the provider’s written agreement to the new owner. Ideally obtained before signing the purchase agreement.
• PSP continuity. Either the existing accounts remain (share deal) or the buyer’s new merchant accounts are live before switch-over (asset deal).
• Affiliate programme accounts. For affiliate sites, how accounts will transfer or be replaced, and how revenue from players tracked to the old accounts is treated.
• Game provider agreements. Whether providers must approve the change.
• Player balances. How funds owed to players at closing are handled.
• Traffic or revenue thresholds. Some buyers ask for a condition that traffic or NGR does not fall below a level before closing. If you accept one, define it precisely.

Each condition is also an exit route for the buyer. Keep them few, specific and outside the buyer’s sole discretion where possible.

Negotiating the LOI as a seller

The seller’s leverage is highest before the LOI is signed, while other buyers are still in the process. Use it on the points that matter most later.

1. Fix the price and the cash at closing. Get a number, not a range, and know how much of it is guaranteed.
2. Define the earnout in full, if there is one: metric, definition, target, threshold, cap, period and payments.
3. Keep exclusivity short. Long enough for diligence, with a fixed end date. Extensions should need your agreement.
4. Limit diligence. A defined scope and period, with the data room ready on day one, so the buyer cannot reasonably ask for more time.
5. Remove financing conditions where you can, or ask for proof that financing is in place.
6. Ask for a deposit if exclusivity is long or the buyer is unproven.
7. Agree transition support and the non-compete now, while you still have leverage.

Red flags in a buyer’s LOI:

• A price “to be confirmed after diligence” or expressed only as a multiple
• Open-ended exclusivity, or exclusivity that renews automatically
• Conditions entirely at the buyer’s discretion, such as “satisfactory diligence” with no scope
• A large share of the price in an earnout with a vague metric
• A financing condition with no evidence of funds
• No timetable

A serious buyer will be specific. Vagueness in an LOI is usually an option the buyer is keeping for later.

What happens after signing

1. Exclusivity starts. You stop marketing the business and pause talks with other buyers.
2. The data room opens. The buyer begins diligence against the agreed scope. See our due diligence checklist.
3. Third parties are approached. Platform, PSPs, providers and, if needed, the regulator, as agreed in the LOI.
4. The purchase agreement is drafted, usually by the buyer’s lawyer, using the LOI terms as the basis.
5. Escrow is set up for the closing payment and any holdback.
6. Signing and closing. For asset deals these can happen on the same day. For licensed share deals, closing follows regulatory approval.

If diligence finds something material, the buyer may ask to change the terms. A specific LOI and a well-prepared data room make it harder to justify large changes, and easier to see when a request is reasonable.

FAQ

Is a letter of intent legally binding?

Mostly not. The commercial terms are non-binding, but clauses such as confidentiality, exclusivity, costs and governing law usually are. The wording and governing law decide, so check with a lawyer.

How long should exclusivity last in an LOI?

Long enough to complete diligence and sign the purchase agreement, with a fixed end date. For licensed share deals, regulatory approval often comes after signing, so exclusivity does not need to cover it.

What is the difference between an LOI and a term sheet?

They do the same job. An LOI is usually written as a letter; a term sheet is usually a table or list of terms. See our term sheet guide.

Can the price change after the LOI?

It can, because the price is not binding. Changes are usually justified by findings in diligence. A specific LOI and a prepared data room limit how much room there is.

Who drafts the LOI?

Usually the buyer, often with input from the seller’s broker. The broker’s role is to make sure the terms are specific and the conditions are reasonable before the seller signs.

Should an LOI mention the licence?

Yes. It should say who holds the licence, whether it comes with the deal, and whether completion depends on regulatory approval.

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