Why take chances? A deep dive into the regulatory, compliance and transactional complexities of acquiring a gambling business

Summary provided by officers
IBA Corporate and M&A Law Committee

A session at the IBA Annual Conference Toronto 2025, on 6 November 2025

Leisure Industries Section (Lead)
Corporate and M&A Law Committee

Session Co-Chairs
Forrest Gillett Alogna, Darrois Villey Maillot Brochier, Paris
James Scicluna, WH Partners, Ta’ Xbiex

Panelists
Marc W Dunbar, Jones Walker, Tallahassee
Cameron A MacDonald, Borden Ladner Gervais, Toronto
Maria McDonald, Nordic Gambling, Stockholm

Session summary

Gambling M&As in North America and Europe today in the .com space often involve activities that are not legal in the sense that they are not specifically licensed or authorised by the relevant jurisdiction in which they operate, raising numerous challenges for lawyers. The discussion was moderated by Forrest Gillett Alogna and James Scicluna. The panelists included Maria McDonald, Marc W Dunbar and Cameron A MacDonald.

The panelists emphasised that value and risk turn on the split between nationally licensed ‘core’ markets and global ‘.com’ operations. The latter are typically unlicensed in at least some jurisdictions in which they operate, but they may have significant cash flows. Europe’s evolving consumer litigation, such as claims in Austria and Germany seeking reimbursement of losses experienced at .com operations on alleged illegality grounds, was flagged as an example of the risks associated with such unlicensed businesses. In terms of M&A tools, such issues can prompt the need for robust due diligence, pricing adjustments and other protections (including rollovers by sellers to provide comfort to the buyer). Another challenge related to such unlicensed business is the potential contamination with licensed activities (as regulators may not look kindly on such activities). In this respect, sponsor suitability can be a key reverse due diligence question, as regulators increasingly demand look‑through visibility into company ownership and influence along the general partner (GP)/limited partner (LP) chain. In Canada, Ontario can provide a genuine ‘white market’ for certain categories of private operators. Throughout the world, it is often crucial to engage with local counsel who have a thorough understanding of what regulators are willing to tolerate, even if such activities may not yet be officially authorised.

In terms of operating models, the industry is moving away from proprietary technology towards outsourced platforms and services. As a result, enduring value often resides in brand strength, licensing and the customer database, shifting the due diligence intensity onto anti-money laundering (AML)/know your customer (KYC) payments and customer relationship management (CRM)/data practices. Buyers are bifurcating by risk posture. United States brick‑and‑mortar‑backed acquirers may prioritise licence integrity and insist on shutting down .com revenue streams pre‑closing, even at the cost of growth and significant cash flows, in order to remain in a good position in regard to their home regulator. More agile strategics may seek to preserve alternative revenue channels, such as First Nations‑licensed activity serving non‑Ontario Canada or sweepstakes/prediction products, accepting the associated change of control, foreign direct investment and suitability sensitivities particular to Europe and Canada. The panel also identified the growing interaction between gambling and securities regulation as ‘prediction markets’ converge with derivatives concepts.

Key takeaways

• Regulatory credibility is the prize: suitability, AML/KYC, data and coordinated approvals matter more than owning code; plan for reverse due diligence and proactive regulator engagement (and/or engage with extremely savvy local advisers);
• the risk map – which includes components such as the core versus .com exposure, Canada’s uneven landscape beyond Ontario and EU consumer claims and other risks posed by unlicensed activities – drives the price, structure and closing conditions; and
• deal paths are diverging based on bidder risk profiles: ‘clean and narrow’ to safeguard licences versus ‘optimise and expand’ utilising alternative channels, each with distinct financing, foreign direct investment and change‑of‑control implications.