Escrow, Deposits and Holdbacks in iGaming Deals

The short answer

Escrow means a neutral third party holds the buyer’s money until agreed conditions are met. In an iGaming sale it solves the trust problem at closing: the buyer does not want to pay before the domains, accounts and data have moved, and the seller does not want to hand anything over before the money is secured. With escrow, the buyer funds the agent first, the seller transfers the assets, the buyer confirms receipt, and the agent releases the money.

The same mechanism is used for two other purposes: a deposit that shows a buyer is serious, and a holdback, where part of the price stays in escrow after closing to cover warranty claims. We coordinate escrow on our deals, because online businesses change hands between parties in different countries who have often never met.

Three uses of held money

Deposits are less common in smaller online deals than in traditional business sales, but they are useful when a seller is asked to stop marketing during an exclusivity period. A deposit makes that exclusivity cost the buyer something if it walks away without reason.

How a closing escrow runs

Affiliate site or white-label brand (asset deal)

1. Agree the terms. Price, the exact list of assets, the inspection period, and who pays the escrow fee.
2. Buyer funds escrow. The agent confirms receipt to both sides. Nothing moves until this happens.
3. Seller transfers the assets. Domains are pushed to the buyer’s registrar account; hosting, Search Console, Analytics, email and social accounts are handed over; affiliate programme accounts are transferred or re-linked as agreed; content and databases are delivered.
4. Inspection period. The buyer checks that everything works and matches what was promised, usually over a few days.
5. Buyer confirms. The agent releases the funds to the seller, less any agreed holdback, and the commission is settled.

Licensed operator (share deal)

1. Sign the share purchase agreement, with completion conditional on regulatory approval and other agreed conditions.
2. Buyer funds escrow before completion, so the money is ready on the day.
3. Conditions are satisfied: regulatory approval received, key consents obtained, any required notices given.
4. Completion. Shares transfer, directors and bank signatories change, and the agent releases the money, keeping back any agreed holdback.
5. Post-completion. PSPs, platform and providers are notified, and the holdback runs for its agreed period.

In both cases the escrow instructions should list the conditions for release in plain terms, so the agent never has to judge a disagreement on its own.

Holdbacks

A holdback, also called a retention, keeps part of the price in escrow after closing. It gives the buyer a fund to claim from if a warranty proves untrue, for example undisclosed chargebacks, a tax liability, or traffic that turns out to come from a penalised link scheme. For the seller, it is usually better than the alternative of the buyer demanding a lower price for the same risk.

The points to agree:

• Size. Often 5–15% of the price on smaller deals, higher where diligence found specific risks.
• Period. Long enough for problems to surface. Six to twelve months is common; tax exposure may justify longer for part of it.
• What it covers. Breaches of warranties and any specific indemnities. It should not double as an earnout or a general price adjustment.
• Claims process. How the buyer notifies a claim, what evidence it must provide, how long the seller has to respond, and who decides if they disagree.
• Release. Automatic at the end of the period, except amounts covered by claims notified in time. Partial releases part-way through reduce the seller’s exposure.
• Interest and fees. Who receives any interest, and who pays the agent for the longer holding period.

A holdback works alongside the warranties in the purchase agreement. It is a practical source of money for valid claims, not a cap on the seller’s liability, unless the agreement says so.

Choosing an escrow agent

Three kinds of agent are used in iGaming deals.

Fees. Usually a percentage of the amount held, sometimes with a minimum. Buyer and seller often split the fee; whatever is agreed should be written into the LOI.

KYC. Expect the agent to verify both parties and the source of the buyer’s funds. Build that time into the closing date, especially for buyers who invest through holding structures.

Crypto. Some iGaming buyers want to pay in stablecoins or other crypto. If so, agree the currency, the network, the wallet addresses, who bears the conversion risk and how the agent handles crypto, before anything is sent. A wrong network or address cannot be reversed.

Currency. Fix the currency of the price in the agreement. If the buyer pays in another currency, agree whose exchange rate applies and when.

Common problems and how to avoid them

• Transferring before funds are confirmed. Never push a domain or hand over credentials until the agent confirms in writing that the money is held. Screenshots of a bank transfer are not confirmation.
• Vague release conditions. “Once the buyer is satisfied” invites delay. List the specific assets and checks, and set a deadline after which silence counts as acceptance.
• Assets that need third-party consent. An affiliate programme or white-label provider that has not approved the transfer can stall the inspection period. Get those consents before funding escrow.
• Payment outside escrow. A buyer proposing to pay part of the price directly “to save fees” removes the protection for that part. Keep the whole closing amount in one controlled process.
• Impersonation. Fraudsters pose as buyers, sellers or escrow services with near-identical domains and payment instructions. Confirm the agent’s details through a channel you already trust, and treat a last-minute change of bank details as a warning sign.
• No plan for the inspection period. Agree in advance who checks what, so both sides know when the buyer’s confirmation is due.

FAQ

Is escrow necessary when selling an affiliate site?

For any deal of meaningful size, yes. It is the simplest way to make sure the buyer pays and the seller transfers, without either side taking the other on trust.

Who pays the escrow fee?

Whoever the parties agree. Splitting it equally is common. Write it into the LOI so it is not argued over at closing.

How long does escrow take?

Funding and verification can take a few days, depending on the agent’s KYC checks. The inspection period on an asset deal is usually a few days. Holdbacks run for months, by design.

What is a holdback in M&A?

Part of the purchase price kept in escrow after closing for an agreed period, to pay valid warranty claims. Whatever is not claimed is released to the seller at the end.

What is an earnest money deposit?

A deposit paid by the buyer early in the process, usually at LOI or signing, to show commitment. It is credited to the price at closing, and the agreement sets out when it is returned or kept if the deal does not complete.

Can I use escrow for a crypto payment?

Some agents handle crypto and some do not. Agree the currency, network and wallet details with the agent in advance, and test with a small amount first where possible.

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