Non-Compete Agreements When Selling an iGaming Business

The short answer

A non-compete is the seller’s promise not to set up or work for a business that competes with the one just sold, for an agreed period and within an agreed scope. Buyers ask for it because they are paying for players, traffic, relationships and know-how that the seller could otherwise take straight to a new venture.

In iGaming the hard part is the definition. Many sellers own or plan other businesses in the same industry: another affiliate site in a different vertical, a B2B service, a stake in an operator. A non-compete that simply says “no iGaming activity” can stop all of that. The aim is a restriction that protects what the buyer actually bought, and nothing wider.

What a non-compete covers

A non-compete clause in a purchase agreement usually has five parts:

Duration varies with deal size and the seller’s role. Periods of one to three years are common in smaller iGaming deals; longer periods are harder to justify and harder to enforce. Non-solicitation of staff and players often runs alongside, sometimes for a different period.

iGaming scope questions

Before agreeing any wording, answer these:

• Which vertical? Casino, sportsbook, poker, bingo, lottery, social casino and sweepstakes are different businesses. Selling a casino affiliate site does not have to stop you running a sports-betting tipster site.
• Which markets? Restrict the markets the business actually serves, not the world. A Nordic casino sale should not stop you operating in Latin America.
• B2C or B2B? Selling an operator does not need to prevent you from running a platform, a game studio or an agency that serves operators.
• Which affiliate activity? For affiliate sites, define competition by vertical, market and language, and possibly by the keywords or operators the site targets.
• Which channels? If the business is an SEO affiliate site, is a paid-media or social-media affiliate business really competing?
• What about investing? Passive shareholdings below a small threshold, or investment in listed companies, are usually excluded.
• What about employment? If you take a job at an operator after the sale, does that breach the clause?

The narrower and clearer the scope, the more likely it is to be enforceable and the less it costs you.

Carve-outs sellers should negotiate

1. Existing businesses. List every other business you own or are involved in at the time of sale, and exclude them by name in the agreement. Buyers usually accept this if the businesses were disclosed before the LOI.
2. Different verticals and markets. Exclude activity outside the vertical and markets the sold business serves.
3. B2B services. Exclude platform, technology, consulting, brokerage or agency work for the industry, unless the sold business is itself a B2B business in that area.
4. Passive investments. Exclude small shareholdings and investment funds where you have no management role.
5. Employment. Exclude employment in a role that does not compete directly with the business sold.
6. Release on buyer breach. If the buyer fails to pay deferred consideration or an earnout, the non-compete should fall away.
7. Release if the business closes. If the buyer shuts down the brand or exits the market, there is nothing left to protect.

Raise the carve-outs at LOI stage. Adding them to the purchase agreement later looks like an attempt to reopen terms.

Enforceability and breach

Courts in most jurisdictions are more willing to enforce non-competes given by the seller of a business than those in employment contracts, because the seller has been paid for the goodwill. Even so, a restriction that is wider than needed to protect the business, in activity, territory or time, may be cut down or refused. The rules differ significantly between countries, so the governing law and where the seller lives both matter.

What a buyer can typically do on breach:

• Seek an injunction to stop the competing activity
• Claim damages for losses caused
• Set off amounts against any unpaid earnout or deferred consideration, if the agreement allows
• In some agreements, recover part of the price under a specific clause

For the seller, the practical protection is a clear clause. Ambiguity about whether an activity is covered tends to be resolved in a dispute, which costs both sides more than agreeing precise wording at the start.

Take legal advice in the relevant jurisdictions before signing. This is an area where the governing law can change the outcome.

How the non-compete affects price and negotiation

A non-compete has real value to a buyer, and it costs the seller something: future opportunities in the restricted space. Treat it as part of the price negotiation, not as boilerplate.

• A broader restriction is worth more to the buyer. If the buyer asks for a wider scope or a longer period than the business needs, that is a reason to ask for a better price or more cash at closing.
• A seller who refuses any restriction lowers the price. Buyers discount heavily if they think the seller could start a rival next month with the same contacts.
• Tie it to payment. If a significant part of the price is deferred or in an earnout, the non-compete should end if the buyer stops paying.
• Disclose your plans. If you intend to stay in the industry in a different role, say so early. Buyers react better to a clear plan than to a surprise in the drafting stage.
• Consider tax. In some jurisdictions, part of the price may be allocated to the non-compete, which can have tax consequences for both sides. Check with an adviser.

FAQ

Will I have to sign a non-compete when I sell my casino or affiliate site?

Usually yes. Most buyers ask for one, because they are paying for the business’s relationships, traffic and know-how.

How long does a non-compete last after selling a business?

It is negotiated. In smaller iGaming deals, one to three years is common. Longer periods are harder to justify.

Can I keep my other iGaming businesses?

Yes, if you list them and exclude them in the agreement. Disclose them before the LOI so the buyer can price the deal accordingly.

Does a non-compete stop me working in iGaming?

It should not, if it is properly scoped. A good clause restricts competing with the specific business sold, in its vertical and markets, not working in the industry at all.

What is the difference between a non-compete and a non-solicitation clause?

A non-compete stops you running a competing business. A non-solicitation clause stops you approaching the sold business’s staff, players, affiliates or partners.

Is a non-compete enforceable?

It depends on the jurisdiction and how wide it is. Seller non-competes are more often enforced than employee ones, but an overly broad clause may be limited by a court.

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