Term Sheets in iGaming Deals

The short answer

A term sheet is a short, structured list of the key terms of a proposed deal: price, structure, payment terms, conditions, protections and timetable. It does the same job as a letter of intent, but in table or bullet form rather than as a letter. Most of it is non-binding, except for clauses such as confidentiality and exclusivity.

In iGaming, term sheets are most common in two situations: investments or partial sales, where governance and shareholder rights need setting out, and larger acquisitions, where the lawyers want a clean summary to draft the purchase agreement from. For a straightforward sale of an affiliate site or a white-label brand, an LOI usually covers the same ground.

Term sheet vs LOI

In practice the labels overlap. Some buyers attach a term sheet to an LOI, so the letter carries the intent and the term sheet carries the detail. What matters is that the key terms are written down specifically before diligence starts. Our LOI guide covers the same terms from the letter side.

A typical term sheet for a full acquisition

The layout below shows the headings a buyer and seller of an iGaming business would normally agree. The bracketed text shows what each line needs.

Term sheets for investments and partial stakes

When an investor buys a stake rather than the whole business, the term sheet has to deal with how the business will be run together afterwards. That is where most of the negotiation sits.

• Valuation. Pre-money and post-money value, and the percentage the investor receives.
• Use of funds. Whether the money goes to the company for growth, or to the existing owner for some of their shares.
• Board and control. Board seats, voting rights and who appoints the managing director.
• Reserved matters. Decisions that need the investor’s consent, such as new markets, large contracts, licence changes, borrowing or selling the business.
• Information rights. Monthly reporting and access to the platform data.
• Transfer rights. Pre-emption on new shares, rights of first refusal on sales, drag-along and tag-along rights.
• Exit. Whether there is an expected timetable or route to a full sale.
• Founder commitments. How long the existing owner stays, vesting or leaver terms, and non-compete.
• Regulatory approval. Many regulators review changes in shareholding above set thresholds, so even a minority stake can need approval.

A partial sale can work well for a founder who wants capital and an experienced partner without leaving. It needs a clear shareholders’ agreement, because disagreements later are harder to resolve than in a full sale.

Using the term sheet to prevent re-trading

Re-trading is when a buyer agrees a price, then reduces it during diligence for reasons that were knowable at the start. A precise term sheet is the best defence.

1. Disclose the known issues before signing. VIP concentration, a pending tax question or a traffic dip should be in the CIM or the data room before the term sheet. A buyer cannot later cite them as new findings.
2. Fix the basis of the price. State the earnings figure and period the price is based on, so any adjustment has to be measured against it.
3. Define working capital and player balances. These are common sources of price adjustments at closing.
4. Limit the diligence scope. List the areas the buyer will review and the period, rather than a general right to satisfactory diligence.
5. Agree a materiality threshold. Some sellers agree that price changes will only be discussed for findings above a stated amount.
6. Keep exclusivity short. A buyer with a deadline has less room to wear the seller down.

None of this stops a buyer reacting to a genuine surprise. It stops the price being reopened for things it already knew.

iGaming points a term sheet should not leave out

Generic term sheet templates miss the items that decide whether an iGaming deal can close. Add them explicitly:

• Licence. Who holds it, whether it transfers, and whether closing depends on the regulator approving the buyer.
• White-label or platform consent. For brands on a white-label, the provider’s written agreement to the new owner.
• Payment accounts. Whether PSP accounts stay with the company or the buyer must onboard, and how rolling reserves are treated.
• Player balances. How funds owed to players at closing are handled in the price.
• Affiliate accounts. For affiliate sites, how programme accounts move and what happens to revenue from players tracked to the old accounts.
• Definition of NGR. If any price element depends on NGR, the exact deductions included.
• Responsible gambling continuity. That self-exclusions and limits carry over.

These points are easy to settle in a page of bullet points before diligence, and expensive to argue about once lawyers are drafting.

FAQ

What is a term sheet in M&A?

A short, structured summary of the key terms of a proposed deal, used as the basis for the purchase agreement. Most of it is non-binding.

Is a term sheet the same as an LOI?

They do the same job in different formats. An LOI is a letter; a term sheet is a list or table. Some deals use both.

Is a term sheet binding?

Usually only the confidentiality, exclusivity, costs and governing-law clauses. The commercial terms become binding when the purchase agreement is signed.

What should a term sheet for selling a casino include?

Structure, price, payment terms, earnout details, escrow and holdback, warranties, regulatory and third-party conditions, transition, non-compete, exclusivity and timetable.

What extra terms apply to a minority investment?

Valuation, use of funds, board seats, reserved matters, information rights, transfer rights such as drag-along and tag-along, and the founder’s ongoing commitments.

Who should review a term sheet before I sign?

Your broker for the commercial terms, and a lawyer for the binding clauses, the regulatory points and the governance terms in a partial sale.

Prefer Telegram? Join iGaming professionals on @igamingdealflow