Change of Control

A gambling licence is granted to a company under particular ownership, and regulators want to know when that ownership changes. Every licensing regime defines a threshold (commonly acquiring 10% or more of the shares or voting rights, or otherwise gaining the ability to direct the business) above which a change of control occurs, and requires the licensee to notify the regulator and, in most regimes, to obtain approval. Britain requires an application within a set period after the change and can revoke the licence if the new controller is unsuitable; the American states require approval before closing; Malta and most European regulators require prior notification and approval.

For deal-making, change of control is the regulatory critical path. An acquisition of a licensed operator across several markets needs approvals from each regulator, each of which will assess the acquirer's owners and key people under its own fit and proper test, on its own timeline; the American state approvals in particular can take many months and are the usual reason a completion date slips. Deal documents allocate the risk: conditions precedent on regulatory approval, long-stop dates, and provisions for what happens if one regulator refuses or delays. Lenders and investors taking security over a licensed business face the same issue, because enforcing security can itself be a change of control.

The clause also appears in commercial contracts: platform, content and affiliate agreements commonly allow termination on a change of control of the other party, because the counterparty a supplier contracted with may not be the one it ends up serving.