How to Write a Letter of Intent (LOI) for an iGaming Business
The Letter of Intent is the document that turns an iGaming acquisition from a conversation into a transaction. It establishes the commercial framework — price, structure, timeline, and key conditions — before either party invests the substantial time and cost of full due diligence and SPA negotiation. Getting the LOI right is one of the most consequential steps in an iGaming M&A process, because the terms agreed at LOI stage establish the negotiating baseline from which the SPA is drafted.
Most generic M&A LOI templates are inadequate for iGaming transactions. They omit provisions specific to gaming licence transfers, player data handling, platform agreements, and the regulatory timelines that affect how and when a transaction actually closes. This guide covers every component of a well-drafted iGaming LOI, the specific provisions that require iGaming expertise to handle correctly, and the negotiating principles that experienced advisors apply to ensure the LOI serves the buyer’s interests without creating unnecessary friction with the seller.
What an LOI Is and What It Isn’t
A Letter of Intent — also called a Term Sheet, Heads of Terms, or Memorandum of Understanding depending on jurisdiction and convention — is a document that records the principal commercial terms that both parties have agreed in principle, prior to the drafting of the binding Sale and Purchase Agreement.
The critical distinction: an LOI is typically non-binding on its substantive commercial terms (price, structure, conditions). The parties are not contractually committed to complete the transaction at the terms outlined. What is usually binding in an LOI — and where breach gives rise to legal remedies — is the exclusivity clause (the seller’s agreement not to negotiate with other parties for a specified period) and the confidentiality provisions.
This distinction matters practically. A seller who receives an LOI at a price they accept, signs it, and then receives a materially lower offer at SPA stage has limited legal recourse if the LOI’s commercial terms were non-binding — their remedy is to walk away from the process, not to enforce the LOI price. This is why the commercial terms of the LOI must be negotiated carefully and should reflect the real parameters of the transaction, not an aspirational opening position.
The Core Commercial Terms
Enterprise value and consideration structure
The LOI must specify the headline enterprise value clearly and break down how that value is to be paid. For a straightforward cash transaction: the total consideration and the payment mechanism at completion. For a transaction with deferred elements: the upfront cash component, the earnout quantum and metric, the payment schedule, and whether any consideration will be held in escrow and for what period.
The LOI should also specify whether the enterprise value is on a cash-free, debt-free basis (standard in M&A) and how working capital will be treated — whether there is a target working capital, what happens if the actual working capital at completion is above or below target, and who bears the cost of working capital adjustments.
Transaction structure
Share sale or asset sale must be specified in the LOI because the structure affects the seller’s tax position, the buyer’s liability exposure, and the gaming licence transfer process. The LOI should specify the acquiring entity (important for regulatory change-of-control purposes), the target entity being acquired, and the governing law of the transaction.
Indicative valuation basis
The LOI should state the financial metrics on which the enterprise value is based — typically trailing twelve-month EBITDA and the multiple being applied. This establishes a clear reference point if the SPA price is later adjusted based on due diligence findings, and prevents disputes about what the parties agreed on the commercial basis of the valuation.
Exclusivity: The Most Important Procedural Clause
The exclusivity clause is the binding heart of the LOI. By granting exclusivity, the seller agrees not to solicit, negotiate, or enter into any agreement with another party for the acquisition of the business for the duration of the exclusivity period. In exchange, the buyer commits to conducting due diligence and progressing the transaction in good faith within the agreed timeline.
Exclusivity periods in iGaming typically run 4–8 weeks for straightforward transactions and 8–12 weeks for more complex deals. The buyer wants sufficient time to complete due diligence and negotiate the SPA without the competitive pressure of other bidders. The seller wants the period to be short enough that if the buyer delays or withdraws, they are not locked out of the market for an extended period.
The LOI should specify what happens at the end of the exclusivity period if the transaction has not closed: does exclusivity automatically expire, can it be extended by mutual agreement, and what are the consequences of the buyer failing to progress the transaction in good faith? Well-drafted LOIs include a buyer obligation to notify the seller within the exclusivity period if any condition is identified that would prevent closing — preventing the buyer from running out the exclusivity clock without engaging seriously.
| Sellers should be cautious about granting long exclusivity periods to buyers who have not demonstrated genuine commitment. A serious buyer with an institutional process will commit to 4–6 weeks and move decisively. An extended exclusivity request without clear due diligence milestones is a warning sign of a buyer who is uncertain or who may be using the exclusivity period to explore alternatives. |
Due Diligence Scope and Process
The LOI should specify the scope of due diligence the buyer will conduct, the format in which information will be provided (typically a virtual data room), and the timeline for key due diligence milestones. While the LOI does not need to reproduce a complete due diligence list, establishing the principal workstreams — financial, commercial, technical, legal, regulatory — prevents later disputes about what was within scope.
For iGaming specifically, the LOI should address access to player data during due diligence. Buyers will require analysis of the player database as part of commercial due diligence, but access to personal data must comply with GDPR and equivalent frameworks. The LOI should specify that player data will be provided in anonymised or pseudonymised form for due diligence purposes, with full data transfer subject to the completion of the transaction and appropriate data processing agreements.
The LOI should also specify who bears the cost of due diligence. The standard position is that each party bears their own costs — the buyer pays for their advisors, the seller pays for theirs. Sellers who have not prepared a data room before the LOI is signed should use the exclusivity period to organise documentation, as the speed and organisation of information provision materially affects the due diligence timeline.
iGaming-Specific LOI Provisions
Generic M&A LOI templates omit several provisions that are material in iGaming transactions. A well-advised buyer will ensure the following are addressed:
Gaming licence transfer
The LOI should specify that the transaction is conditional on gaming licence transfer (or change-of-control approval) from the relevant regulatory authority. It should identify the specific licence(s) being transferred, the relevant regulatory authority, the expected timeline for approval, and what happens if approval is delayed beyond the expected closing date or if approval is refused.
Platform and software provider agreements
The LOI should identify whether the business operates on a proprietary or white-label platform, and confirm that the buyer has reviewed the principal platform and software provider agreements. Material platform agreement terms — revenue share rates, minimum commitment periods, assignment restrictions — should be identified in the LOI as items to be confirmed in due diligence.
Regulatory compliance representations
The LOI should include a specific seller representation that, to the best of their knowledge, there are no outstanding regulatory investigations, compliance breaches, or unresolved player complaints with the licensing authority as of the LOI date. This representation establishes a baseline that protects the buyer if regulatory issues emerge during due diligence or post-closing.
Interim operating covenants
Between LOI signing and closing, the seller should be subject to covenants requiring them to operate the business in the ordinary course — not making material changes to the affiliate programme, not reducing marketing spend significantly, not altering the platform configuration in ways that affect player experience, and not entering into material new contracts without buyer consent. These covenants prevent the seller from taking actions that would materially change the business between the price being agreed and the transaction completing.
Conditions to Closing
The LOI should identify the principal conditions that must be satisfied before the transaction can complete. In iGaming, the standard conditions include:
- Regulatory approval: gaming licence change-of-control approval from the relevant authority
- Due diligence satisfaction: the buyer completing due diligence and confirming they are satisfied with the findings (subject to material adverse change provisions)
- Third-party consents: any material contracts that require counterparty consent to assignment — principal software provider agreements, payment processor agreements — must be consented to before closing
- No material adverse change: a condition that the business has not suffered a material adverse change in its financial condition, regulatory standing, or operational capability between LOI signing and closing
- Completion accounts: the preparation and agreement of completion accounts confirming the working capital and net debt position at closing
Binding vs Non-Binding Provisions
| LOI provision | Typically binding or non-binding? |
| Enterprise value and consideration structure | Non-binding — confirmed in SPA |
| Transaction structure (share vs asset sale) | Non-binding — confirmed in SPA |
| Exclusivity clause | Binding — breach gives legal remedies |
| Confidentiality / NDA | Binding — often incorporated by reference to a separate NDA |
| Due diligence process and timeline | Partially binding — procedural obligations but not substantive terms |
| Regulatory condition | Non-binding in LOI — binding condition in SPA |
| Governing law and jurisdiction | Binding — determines which courts resolve disputes about the LOI itself |
| Break fee (if applicable) | Binding — enforceable if included |
Common LOI Negotiation Points
The LOI negotiation in iGaming typically focuses on a small number of commercial points where buyer and seller interests diverge. Understanding these in advance allows both parties to move through the negotiation more efficiently.
Price certainty vs due diligence flexibility: Buyers want the right to reprice if due diligence reveals material issues. Sellers want a firm price commitment that cannot be reduced on minor findings. The resolution is typically specifying that price adjustment is only permitted for findings above a materiality threshold — defined as a specific monetary amount or percentage of enterprise value.
Exclusivity length: Buyers push for longer exclusivity; sellers push for shorter. The resolution is often a shorter initial period with an option to extend by mutual agreement, conditional on the buyer demonstrating due diligence progress at a defined milestone.
Break fee: Some LOIs include a break fee — a specified payment from buyer to seller if the buyer withdraws from the transaction after exclusivity has been granted without a legitimate contractual reason. Break fees in iGaming LOIs are not universal but are reasonable to request when the seller is giving up meaningful alternative buyer opportunities to grant exclusivity to a specific party.
Interim operating covenants: Sellers resist overly restrictive interim covenants that limit their operational flexibility during the due diligence period. The resolution is specifying covenants at the level of ‘ordinary course of business’ operation rather than requiring seller consent for every routine decision.
LOI to SPA: What Carries Over
The LOI is not the SPA — but the commercial framework established in the LOI sets the foundation from which the SPA is drafted. Points conceded at LOI stage are very difficult to recover at SPA stage. This is why experienced iGaming M&A advisors are unequivocal: do not treat the LOI as a preliminary or informal document. Negotiate it with the same rigour you would apply to the SPA itself.
The terms that most directly carry from LOI to SPA are: the enterprise value and consideration structure (including earnout mechanics if applicable), the transaction structure, the principal conditions to closing, and the exclusivity and confidentiality framework. The SPA will add substantial legal detail to each of these — representations, warranties, indemnities, completion mechanics, dispute resolution — but the commercial skeleton established in the LOI determines the parameters within which that legal detail is negotiated.
| CasinosBroker.com — LOI drafting and negotiation advisory for iGaming M&A. casinosbroker.com |
Frequently Asked Questions
Q: Is an LOI legally binding in iGaming M&A?
Partially. The exclusivity and confidentiality provisions are typically binding and enforceable. The commercial terms — price, structure, conditions — are typically non-binding, meaning neither party can be forced to complete a transaction on those terms alone. The legal character of specific LOI provisions depends on the governing law and the precise language used. Any LOI in a transaction above €500K should be reviewed by a lawyer before signing.
Q: Can the buyer change the price after the LOI is signed?
Yes — but only within the parameters specified in the LOI. If the LOI includes a material adverse change provision or a due diligence out (the buyer’s right to withdraw if due diligence reveals material issues above a specified threshold), the buyer can reprice or withdraw on those grounds. Attempting to reprice based on minor or pre-existing issues that were available to the buyer at LOI stage is commercially bad practice and will damage the buyer’s reputation in a niche market like iGaming where advisors and operators know each other well.
Q: How long does LOI negotiation typically take in iGaming?
In straightforward transactions, 5–10 business days from the buyer’s initial LOI submission to executed document. More complex transactions — involving earnout mechanics, multiple entities, or unusual regulatory conditions — may take 2–3 weeks. Extended LOI negotiations (beyond 3 weeks) are usually a sign of fundamental commercial disagreement that will resurface in the SPA — it is often better to address these directly at LOI stage than to paper over them and encounter them again later.
Q: Should a seller get independent advice before signing an LOI?
Absolutely. The seller granting exclusivity to a buyer is making a material commercial commitment — forgoing the ability to negotiate with other parties for the exclusivity period. Any operator seriously considering signing an LOI on a business of meaningful value (above €250K) should have experienced iGaming M&A advisory representation. The cost of advisory support at this stage is a fraction of the value impact of signing an LOI on unfavourable terms.
Q: What happens if the buyer submits an LOI significantly below the seller’s expectation?
The seller can counter-propose on price, request a revised LOI, or decline to engage further. In a competitive process managed by CasinosBroker, sellers have the benefit of knowing the market price for their asset before receiving offers, which makes low-ball LOIs easy to identify and address. Sellers who engage with a low-ball LOI without pushback implicitly validate the buyer’s price view and make it harder to achieve a fair outcome at SPA stage.
Q: Can an LOI be signed electronically?
Yes — electronic signatures are legally valid for LOIs in most jurisdictions, including under the EU eIDAS regulation and the UK’s Electronic Communications Act. The SPA and completion documents may have higher execution requirements depending on jurisdiction — share transfer instruments in some jurisdictions require wet ink signatures or notarisation. Confirm the execution requirements for the specific transaction jurisdiction with legal counsel.
Q: What is a ‘no-shop’ provision and is it the same as exclusivity?
A no-shop provision prevents the seller from actively soliciting competing offers — i.e., approaching other buyers to generate competing bids. Exclusivity goes further, preventing the seller from engaging with any third party who approaches them unsolicited as well. In practice, most iGaming LOIs use full exclusivity rather than a no-shop, because the distinction matters less for smaller businesses where the buyer market is not actively pursuing the asset independently.
Q: Should the LOI specify what happens if regulatory approval is refused?
Yes — this is one of the most important iGaming-specific provisions and one that generic LOI templates omit. The LOI should specify: what happens if the regulatory authority refuses to approve the change of control; whether the buyer has the option to restructure the transaction to address the regulatory concern; and how costs incurred by both parties are allocated if the transaction cannot complete due to regulatory refusal. Leaving this unaddressed creates potential for significant dispute if a UKGC or MGA change-of-control application is refused.
Q: How does CasinosBroker assist with LOI drafting and negotiation?
CasinosBroker advises on LOI terms as a standard component of our M&A advisory mandate. This includes reviewing buyer-submitted LOIs for terms that disadvantage the seller, advising buyers on constructing LOIs that reflect market norms and are likely to be accepted, coordinating with transaction counsel on the iGaming-specific provisions, and managing the negotiation between parties to reach an executed LOI efficiently. Our experience across 110+ iGaming transactions provides direct precedent reference for every LOI clause.
Q: What is the difference between an LOI and a term sheet in iGaming M&A?
The terms are used interchangeably in most iGaming M&A contexts. Technically, a term sheet is typically shorter and more bullet-point in format, while an LOI is drafted as a formal letter with more developed clause language. In practice, both documents serve the same function — recording the agreed commercial terms before the SPA is drafted — and the legal analysis of binding versus non-binding provisions applies equally to both formats.
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