What is a reverse termination fee?

A reverse termination fee is a sum the buyer pays the target if the buyer fails to complete an agreed acquisition, typically because financing falls away or a regulator refuses clearance. It is the mirror image of a break fee, which the target pays the buyer. It compensates the target for months of disruption that end with no transaction.

How does a reverse termination fee differ from a break fee?

A break fee is paid by the target, usually when it walks away to accept a better offer. A reverse termination fee is paid by the buyer when it cannot close. In Caesars Entertainment's 2026 agreement the buyer's reverse fee is $450 million against a $200 million fee payable by the company, reflecting that the buyer carries the licensing and financing risk.

Why do reverse termination fees matter in gambling deals?

Gambling acquisitions need approval from gaming regulators wherever the target is licensed, so the risk that a buyer cannot be licensed is real. The reverse fee prices that risk. Its size, and whether it is paired with a hell-or-high-water commitment on regulatory approvals, is often the best guide to whether an announced deal will actually complete.

M&A

Reverse Termination Fee

Reviewed by iGaming Times editorial teamLast reviewed 24 September 2026

What is Reverse Termination Fee?

A sum the buyer pays the target if the buyer fails to complete an agreed acquisition, typically because financing falls away or a regulator refuses clearance. The mirror image of a break fee.

Key takeaways

A reverse termination fee is paid by the buyer to the target if the buyer fails to complete, typically over financing or regulatory clearance.
In gambling M&A it is where licensing risk is priced, which makes it one of the most negotiated numbers in the agreement.
Caesars Entertainment's 2026 deal pairs a $450 million reverse fee with a $200 million fee payable by the company.

Why it matters

In gambling M&A the reverse termination fee is usually the single most negotiated number in the agreement, because it is where regulatory risk is priced. A target agreeing to be acquired takes its business off the market, tells its staff and its regulators, and absorbs months of disruption. If the buyer then cannot get licensed, or cannot raise the debt, the target is left with the damage and no transaction. The reverse fee is what it collects instead.

Size signals conviction. Caesars Entertainment’s 2026 agreement carries a $450 million reverse fee against a $200 million fee payable by the company, and that asymmetry is deliberate: the buyer is the party carrying the licensing and financing risk, so the buyer posts the larger stake. The fee also interacts with the covenant standard. A buyer that has accepted a hell-or-high-water obligation on regulatory approvals has agreed to do almost anything to get cleared, and a large reverse fee is what makes that promise credible. Where the covenant is softer, a reasonable best efforts standard, the reverse fee is often the only real protection the seller has. Readers assessing whether an announced gambling deal will actually complete should look at this number before they look at the price.

The bottom line

The reverse termination fee is where a merger agreement prices regulatory and financing risk. Its size relative to the break fee shows who is carrying it.

Sources

Caesars Entertainment, Inc. Form 8-K (merger agreement with Fertitta Entertainment) - US Securities and Exchange Commission (EDGAR)