Over the last two decades, private equity (PE) firms have poured billions into the gambling industry — driven by the opportunities created by regulatory reform, digital transformation, and the explosive growth of online gambling. From land-based casinos, retail sportsbooks, and online casinos to igaming platforms and B2B tech providers, gambling businesses have been prime candidates for the classic PE strategy: buy, scale, optimise, and exit.
But many PE firms are now discovering that the exit phase in gambling is far trickier than expected. The same levers that used to grow and streamline these businesses — roll-ups, efficiency, and market consolidation — can lead to a state where the potential buyers either can’t or won’t buy them. This is due to some combination of size, complexity, regulatory exposure, competition, or a perceived lack of future upside. Thus, some of the most “optimised” gambling assets are turning into long-hold headaches rather than profitable exits.
One of the PE firms’ favourite strategies in gambling has been market aggregation, merging multiple operators across regions or verticals to create scaled platforms. For instance, PE firms have consolidated numerous local sportsbook or slot-arcade operators under single-brand umbrellas, stitched together global igaming suppliers, and merged B2B tech stacks into all-in-one platforms.
While this has often created some cost and scale advantages, the end result is a business that can be too large, too diverse, or too geographically complex for most natural buyers.
Cirsa is a case in point. One of the largest casino and gaming operators in Europe and Latin America was acquired in 2018 by U.S.-based Blackstone. The deal, reportedly worth over €2 billion, made sense to someone at the time: Cirsa had a dominant footprint in Spain, a good-sized business in Italy, and operations in Latin America, and strong cash flow from its retail slot and casino businesses.
Seven years later, Blackstone’s planned exit has shown itself to be difficult. So much so that it has announced that it will IPO the business at an enterprise value of €2.5 billion. While Cirsa generates stable EBITDA, it is also geographically fragmented and exposed to increasing regulatory burdens in Spain and Italy. In Colombia, Panama, and Argentina, the political and exchange-rate risks are not insignificant.
Large strategic buyers of online gambling businesses, such as Flutter or Entain, already own expansive global operations. They may be reluctant to take on another large asset that inevitably brings competition headaches due to overlaps with their existing footprint or comes with complicated licensing obligations across multiple jurisdictions. Smaller strategic buyers often don’t have the financial wherewithal to acquire such businesses, especially in the current high-interest-rate environment.
Private equity’s calling card is efficiency: reducing costs, rationalising headcount, automating operations, and maximising EBITDA. In the gambling industry, this often means closing unprofitable markets, offshoring customer support, automating risk management, and pushing aggressive affiliate marketing.
These measures boost margins, but they can also make the business unattractive to strategic buyers looking for future growth. Many PE-backed gambling companies have already saturated key markets and extracted most operational synergies. There’s simply not much left for the next buyer to improve.
Take an online betting company that has already expanded into the U.S., optimised its tech stack, and slashed marketing and trading costs. A buyer evaluating the asset may see a limited number of new markets, leading to a flatlining user base, stiff competition, and limited room for margin expansion. Some states are now reviewing online-betting tax rates, which can mean only one thing: higher taxes. Without a clear path to revenue growth or product innovation, the business, which was supposed to be a cash cow, but is eating up capital in its “path to profitability”, commands a much lower multiple than initially anticipated.
Perhaps the biggest barrier to PE exits in gambling is the growing weight of regulation. In Europe, particularly the UK, Spain, the Netherlands, and Germany, regulatory tightening has reduced revenue opportunities and increased compliance costs, whilst the black market is growing.
In the U.S., few new states are legalising sports betting and despite industry optimism, I don’t see any states with a meaningful population legalising igaming in the near future. Acquisition costs remain sky-high and profitability is hard to find in many markets.
As a result, some PE-owned gambling firms, including those with U.S. exposure, are perceived as having already enjoyed their growth phase. They entered new markets early, scaled quickly, and are now maturing into low-growth businesses.
These will be hard to sell at a good multiple. Buyers want upside and in gambling, that increasingly looks risky, expensive, or both. New market entry is slow and capital intensive. Product innovation is hampered by compliance and platform rigidity. And user acquisition is dominated by high-cost promotional wars—unsustainable without scale or differentiation.
In short, PE firms bought into gambling at the height of its growth curve; now they’re trying to sell during a plateau.
Faced with such challenges, many PE firms are now considering the once-taboo strategy: splitting up the company before selling it. In other words, breaking up what they once spent years, and potentially significant capital, putting together.
For conglomerate gambling groups, this could mean spinning off regional assets (e.g., U.S. vs. Latin America vs. Europe), selling B2B and B2C arms separately, or carving out proprietary tech platforms for independent sale.
In fact, it is no surprise that the “Always for Sale, Never Sold” company, Playtech, agreed to sell its Italian consumer arm, Snaitech, in 2024, which it acquired in 2018 for €846 million. The sale to Flutter was for €2.3 billion, having improved its EBITDA from €139 million to €256 million.
The trade off with breaking up a company and selling its parts is execution risk. Breakups require operational disentanglement, license transfers, and tax planning, and could involve writing off some synergies. This is likely to mean receiving a lower multiple than had been anticipated. But for PE firms sitting on assets that will not sell whole, it may be the only viable path to liquidity.
Another often-overlooked issue is operational complexity. Many PE roll-ups in gambling involve stitching together different systems, teams, and licenses across dozens of jurisdictions. The result is a patchwork of platforms, brands, and compliance frameworks that are difficult to integrate or scale.
Buyers looking at these businesses see a long and costly integration slog and sometimes a lack of coherent corporate culture. Some PE firms manage exclusively for short- to medium-term financial performance, not long-term brand building or employee retention. That leaves the business without a clear identity or growth vision, two things strategic buyers increasingly prioritise. It is only when they think about selling the business that they ask management for a visionary business plan.
Finally, valuation expectations remain a stumbling block. PE firms naturally want to exit at a multiple that reflects the growth, efficiency, and market position they believe they’ve achieved and the capital they’ve ploughed into the business. But strategic buyers, especially those operating in gambling’s low-margin high-risk environment, are less willing to pay premiums for mature or optimised assets unless there is a solid strategic reason to do so.
This disconnect leads to stalled processes, failed auctions, and drawn-out hold periods. In many cases, PE owners are forced to reinvest or refinance, delaying exits and absorbing more operational risk.
As private equity adapts to this new reality, the focus may need to shift. Instead of just optimising for exit, firms must think more deeply about building sustainable businesses with long-term appeal, narratives that resonate not just with investors, but with customers, regulators, and future buyers alike.
Because in gambling, as in private equity, you don’t just need to win. You also need to know when and how to cash out.
