Start with the right revenue
Gambling companies report several revenue lines and a valuation that uses the wrong one is wrong by a large factor. Handle or turnover is the amount staked. Gross gaming revenue (GGR) is stakes minus winnings paid out, the amount the operator keeps before anything else. Net gaming revenue (NGR) is GGR after bonuses, free bets and promotions: Entain, for example, defines sports NGR as sports gross win margin less free bets and promotional bonuses, and Flutter reports revenue net of new player and retention incentives. Gaming taxes come after that, and where they sit varies by company, so check the definition before comparing. Bonuses and taxes together can take well over 30% of GGR in a promotional, high-tax market: New York taxes mobile sports wagering revenue at 51 percent, and Britain's Remote Gaming Duty rose from 21% to 40% from 1 April 2026. What is left after both is what pays the bills.
Valuation works on NGR and on EBITDA, and a buyer should rebuild both from the ledger rather than accept the seller's presentation. The common adjustments: bonus cost booked as marketing rather than as a revenue deduction, which inflates the revenue line; gaming taxes deducted from revenue by one company and charged as cost of sales by another (Kindred reported its revenue after betting duties, while Flutter charges gaming taxes in cost of sales); affiliate commissions and other variable costs, which companies do not all classify in the same line. Comparability requires a single definition applied to every company in the set.
Multiples
The working currency of gambling M&A is enterprise value to EBITDA, with revenue multiples used for businesses that are not yet profitable, which in a growth market is many of them. The ranges move with the cycle, but the structure is stable:
- Mature regulated operators in Europe trade and transact at single-digit to low-double-digit EBITDA multiples, higher for scaled online-led businesses and lower for retail-heavy ones. FDJ's 2024 offer for Kindred, for instance, had a total value of 10.9 times Kindred's 2023 underlying EBITDA.
- Suppliers, particularly content studios and platform providers with recurring B2B revenue, command a premium to operators because their revenue is contracted, their capital intensity is lower and their exposure to any single regulator is diversified. Margins tell the same story: the live-casino supplier Evolution reported an adjusted EBITDA margin of 66.1% for 2025, against the 23% EBITDA margin on Kindred's 2023 revenue cited in FDJ's offer announcement.
- US-facing growth businesses were valued on revenue multiples during the state-by-state expansion, and the multiples compressed hard when the market began to ask for profit.
- Affiliates trade on EBITDA multiples that reflect the perceived durability of their search rankings; a business dependent on one search engine's algorithm is priced with that fragility. Catena Media, a listed affiliate, reported that two Google algorithm updates in the fourth quarter of 2024 created high volatility in its casino-facing organic search operations, with rankings swinging widely from day to day, contributing to a 6 percent fall in revenue from the previous quarter.
Multiples are a shorthand for a discounted cash flow that nobody wants to write out, and in gambling the shorthand hides three things the buyer has to think about explicitly.
The three adjustments gambling requires
Regulatory revenue quality. Revenue from a market where the operator holds a local licence is worth more than revenue from a market it serves from offshore, because the second can be lost to a regulatory change, a payment blocking order or a buyer's own suitability problem. Serious buyers split the target's revenue by market and apply a different multiple, or a haircut, to each tier: locally licensed, licensed elsewhere and tolerated, and unregulated. A target with a third of its revenue in the last tier will find that third valued at a fraction of the rest, and often excluded from the headline price and handled through an earnout.
Tax and regulatory change. Gaming taxes rise more often than they fall, advertising restrictions tighten, affordability rules cut deposits. A DCF for a gambling business should carry explicit scenarios for the two or three regulatory events most likely in its main markets over the hold period, and the base case should not be the current rules continuing unchanged. Acquired businesses have been written down for exactly this reason: Entain recorded a £487.7m impairment of its UK goodwill in 2025 because of the UK tax increases, after a £113.1m impairment of BetCity in 2024 following Dutch deposit limits and a higher gaming tax rate.
Customer base durability. The value is the customers, and customers churn. A cohort analysis showing how much of today's NGR comes from customers acquired each year, and how each cohort decays, is the single most informative piece of diligence a buyer can do. A business whose revenue is mostly from recent cohorts on heavy bonuses is a business that has to keep buying customers; one with deep, stable older cohorts has an asset.
Building the model
A defensible valuation model for a gambling target has these components:
- Revenue by market and product, projected from cohort retention and planned acquisition spend, not from a growth rate.
- Gaming tax by market at current rates with scenario overlays.
- Marketing split into acquisition (variable, a decision) and retention (semi-fixed).
- Platform and content costs, which are often a percentage of revenue and move with the mix.
- Compliance and licensing costs, which tend to rise as markets tighten their rules.
- Capital expenditure, mostly technology, and working capital, which carries almost no customer receivables because customers deposit ahead of play; those deposits are not free cash, though, since operators such as Flutter hold them in segregated accounts that are not used for general corporate purposes.
- Synergies, modelled separately and never in the standalone case.
The output is a standalone value and a value-to-the-buyer, and the gap between them is what the buyer can afford to pay above standalone and still create value. Paying the full synergy value to the seller is a gift; paying none of it loses the deal to someone who will.
Synergies, honestly
Cost synergies in a consolidation deal come from one platform instead of two, one set of licences, one marketing organisation, and reduced duplicated overhead. They are real, they are quantifiable, and they take two to three years and a migration to realise: Flutter and The Stars Group targeted about £140 million of annual cost synergies, with run-rate phasing of £25 million, £115 million and £140 million in the three years after completion. Revenue synergies (cross-selling casino to the acquired sportsbook base, for instance) are also real and much less reliable, and experienced buyers weight them at a fraction of the plan. The same Flutter announcement named revenue cross-sell as a benefit but put a figure only on the cost synergies.
Dis-synergies are the part the plan usually omits: customers lost in a platform migration, key staff who leave, a brand retired too early, and a supplier's third-party customers who walk when it is bought by their competitor. A vertical deal in particular should model the loss of the supplier's other customers as a base-case cost.
Comparable transactions and their limits
Precedent deals give a range, and the range is wide because every gambling deal carries idiosyncratic regulatory and market-mix factors. The disciplined use of comps is to explain why the target should sit at a particular point in the range with reference to revenue quality, growth, margin and regulatory exposure, rather than to average the set.
Listed comparables are more useful than they look, because gambling has a deep set of listed companies across every sub-sector. Their trading multiples set the ceiling for what a listed acquirer can pay without diluting its own valuation, and they move daily; the constituents of the iGT 25 give a live read on where each sub-sector is being valued.
What the number is for
A valuation is a negotiating position, a board paper and a lender's covenant, and it has to survive all three. The buyer's internal number should be built bottom-up with the adjustments above; the number offered to the seller is a separate decision. The next lesson is about the work that tests whether the internal number is right.