Earnouts, Escrow and Seller Financing in iGaming Deals
The headline price in an iGaming deal is only part of the story. How and when that price is paid often matters more to the seller, and it is where buyers and sellers most often disagree. These are the main payment mechanisms and the trade-offs each one carries.
Upfront cash
The full price is paid at completion, usually through escrow. Sellers prefer it for obvious reasons. Buyers accept it when the revenue is well documented, the business does not depend on the seller and there is little regulatory uncertainty.
Earnouts
Part of the price depends on performance after completion – for example, a further payment if revenue or profit over the next 6 to 12 months meets an agreed level.
- Why buyers use them: they bridge a valuation gap and protect against revenue falling after handover, such as a traffic drop after a search update.
- Seller risk: the seller no longer controls the business that determines the payment.
- What to agree: a precise definition of the metric, how it is measured and reported, what the buyer may and may not change, and what happens if the business is resold.
Escrow
An independent escrow holds the buyer's funds until agreed conditions are met, then releases them to the seller. In digital asset deals, the release is usually tied to handover steps: domains transferred, accounts moved, data delivered. CasinosBroker coordinates escrow on its transactions so that neither side is exposed while assets are moving.
Holdbacks
A portion of the price is retained for a fixed period after completion to cover warranty claims or unexpected liabilities. Holdbacks are common in share deals, where the buyer inherits the company's history.
Seller financing
The seller accepts part of the price in instalments, often documented as a promissory note. It widens the buyer pool and can support a higher headline price, but the seller becomes a creditor of the buyer. Security over the assets and clear default terms are essential.
Transition periods
Most buyers expect the seller to provide handover support – introductions to operators and suppliers, training, and help with account transfers. Agree the length, hours and any fee in writing. Thirty days is a common starting point for smaller deals.
Comparing the options
| Mechanism | Protects | Main risk |
|---|
| Upfront cash | Seller | Buyer overpays if revenue drops |
| Earnout | Buyer | Seller depends on buyer's management |
| Escrow | Both | Delays if release conditions are vague |
| Holdback | Buyer | Seller's cash tied up |
| Seller financing | Buyer's cash flow | Seller exposed to buyer default |
Practical advice
- Compare offers on the cash you are likely to receive and when, not on the headline figure.
- Keep earnout periods short and metrics simple.
- Define escrow release conditions step by step.
- Have the payment terms reviewed by a lawyer before signing the LOI.
CasinosBroker.com models deal structures for each offer on its mandates, showing the seller the trade-off between price, certainty and timing. |
