Seller Financing When Selling an iGaming Business
The short answer
Seller financing means the seller lets the buyer pay part of the price after closing, in agreed instalments, usually with interest. The buyer gets the business with less cash up front; the seller gets a sale, often at a better price, but carries the risk that the remaining instalments are not paid.
It comes up often in iGaming deals because conventional acquisition finance is hard to find: many banks will not lend against gambling businesses or online assets. Seller financing works best when the down payment is large, the term is short, and the seller holds real security until the last payment is made. Without those, the seller is effectively lending to a stranger against an asset that can lose value quickly.
How seller financing works
- Down payment. The buyer pays a share of the price at closing, through escrow.
- Promissory note or deferred payment clause. The balance is written into the purchase agreement or a separate loan agreement, with the amount, schedule, interest rate and what happens on late payment.
- Instalments. The buyer pays monthly or quarterly, often from the business’s own cash flow.
- Security. The seller holds something that can be enforced if payments stop: a pledge over the shares, retained ownership of key assets, or funds in escrow.
- Final payment. Once the balance is paid, security is released.
Unlike an earnout, the amount is fixed. The buyer owes it whatever the business does after closing. That certainty is what makes it more valuable to the seller than an earnout of the same size, provided the buyer can and will pay.
Worked example
The figures below are illustrative.
An affiliate portfolio sells for EUR 500,000. The buyer pays EUR 300,000 (60%) at closing through escrow. The remaining EUR 200,000 is paid in four equal quarterly instalments of principal over 12 months, with interest at 8% a year on the outstanding balance. The domains stay registered to the seller until the final payment.
| Quarter | Balance at start (EUR) | Principal (EUR) | Interest at 2% a quarter (EUR) | Total paid (EUR) |
|---|---|---|---|---|
| 1 | 200,000 | 50,000 | 4,000 | 54,000 |
| 2 | 150,000 | 50,000 | 3,000 | 53,000 |
| 3 | 100,000 | 50,000 | 2,000 | 52,000 |
| 4 | 50,000 | 50,000 | 1,000 | 51,000 |
| Total | 200,000 | 10,000 | 210,000 |
The seller receives EUR 510,000 in total, EUR 10,000 more than the headline price, in exchange for waiting and carrying the risk. After the first quarter the seller’s exposure falls to EUR 150,000, and keeps falling with each payment. A short term with front-loaded payments reduces risk faster than a long one.
The risks for the seller
- The business declines under the new owner. Traffic falls after a Google update, VIPs leave, or the new owner simply runs it worse. The buyer then struggles to pay from cash flow.
- The buyer cannot or will not pay. Some buyers rely entirely on the business to fund the instalments.
- The asset loses value before you can take it back. If you have to reclaim an affiliate site after months of neglect, its rankings may already be gone. A casino that has lost its PSP or licence may be worth little.
- Enforcement across borders. If the buyer is in another country, chasing payment through the courts is slow and costly.
- Dilution of security. If the buyer merges the business into another, moves players to a different platform, or changes the domain, there may be little left to reclaim.
The common thread is that iGaming assets can lose value quickly in the wrong hands. Protections need to work fast, not just exist on paper.
Protections to put in place
- A substantial down payment. The more the buyer pays up front, the more it has to lose by walking away.
- A short term. Months rather than years, so the seller’s exposure ends while the business still looks like the one sold.
- Security over the asset. For a share deal, a pledge over the shares. For an asset deal, the domains held in escrow or kept registered to the seller until the final payment, or retention of title in the purchase agreement.
- Personal or parent-company guarantee from the buyer’s owners, where the buying entity has few other assets.
- Operating covenants. The buyer keeps the brand, the domains and the platform in place, keeps marketing at a reasonable level, and does not sell or merge the business until paid.
- Reporting. Monthly figures and read-only access to the platform or tracking data, so problems show early.
- Default and acceleration. A missed payment, after a short cure period, makes the whole balance due at once.
- Step-in rights. On default, the seller can take back control of the asset quickly, with the transfer mechanics agreed in advance.
- Interest on late payments, and the buyer covers the seller’s collection costs.
- Governing law and jurisdiction that make enforcement practical.
How these are drafted depends on the jurisdictions involved. Have a lawyer prepare the note and the security documents.
If the buyer defaults
- Act early. Watch the monthly reports. A drop in traffic or deposits usually comes before a missed payment.
- Talk first. A short delay with a clear catch-up plan is often better than enforcement. Agree any revised schedule in writing.
- Give formal notice. If a payment is missed, send the default notice the agreement requires, starting the cure period.
- Enforce the security. If the buyer does not cure, use the share pledge, reclaim the domains from escrow, or exercise retention of title, as the agreement provides.
- Take back control quickly. Secure the domains, hosting, tracking and accounts before value drains further. Step-in rights agreed in advance make this faster.
- Decide what next. Run the business again, sell it to another buyer, or negotiate a settlement with the original buyer.
Keep the instalments already received in mind. In the worked example above, a default after two quarters would leave the seller with the down payment and EUR 107,000 of instalments, plus the right to reclaim the asset, which limits the loss.
Seller financing vs earnout
| Seller financing | Earnout | |
|---|---|---|
| Amount owed | Fixed | Depends on performance |
| Main risk for the seller | The buyer cannot pay | The business underperforms, for whatever reason |
| Solves | The buyer’s lack of cash | Disagreement about how durable the revenue is |
| Security | Can be secured on the asset | Usually unsecured, sometimes partly in escrow |
| Interest | Usually yes | Usually no |
| Buyer’s incentive | Pay to keep the asset | Pay only if targets are met |
Some deals use both: an earnout for the part of the price the buyer doubts, and a seller note for the part it simply cannot fund at closing. See our earnouts guide for how those are structured.
FAQ
What is seller financing?
The seller lets the buyer pay part of the purchase price in instalments after closing, usually with interest and security.
Why is seller financing common in iGaming?
Because conventional acquisition loans for gambling and online businesses are hard to obtain, so buyers often need part of the price deferred.
How much should the down payment be?
As much as the buyer can pay. The larger the down payment, the less the seller has at risk and the more the buyer has to lose by defaulting.
How can I secure seller financing on an affiliate site?
Keep the domains registered to you or held in escrow until the final payment, include retention of title in the agreement, and require monthly reporting and read-only access to tracking data.
What interest rate should I charge?
Enough to reflect the risk and the time value of money. Agree it in the LOI. Tax treatment of interest varies by jurisdiction, so check with an adviser.
What happens if the buyer stops paying?
The seller serves a default notice, and if it is not cured, enforces the security and takes back control of the asset under the terms agreed in the purchase agreement.
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