UK’s IG Group to Buy Prediction Markets Operator Underdog in Deal Worth Up to $1.3 Billion
IG Group has agreed to acquire U.S. DFS and prediction markets operator Underdog for up to $1.3 billion, its biggest move yet into the American prediction markets sector.
UK-listed trading platform IG Group has agreed to acquire U.S. daily fantasy sports and prediction markets operator Underdog in a deal worth up to $1.3 billion, marking IG’s biggest move yet into the fast-growing American prediction markets sector. The transaction includes roughly $1.1 billion in upfront consideration and an earnout of about $200 million tied to Underdog hitting 2026 performance targets.
The deal, announced July 30, comes less than two weeks after Underdog launched its own in-house sports event contract exchange, and it lands at a moment when prediction markets have become one of the most contested growth areas in U.S. online trading and entertainment.
How the Deal Is Structured
IG’s upfront consideration values Underdog at an enterprise value of approximately $1.1 billion, equivalent to 2.4 times the company’s trailing 12-month net revenue through June 2026, which came in at roughly $466 million, up 21% year-over-year. The expected upfront equity value of about $963 million will be funded through the issuance of approximately 24.1 million new IG ordinary shares alongside a cash payment of around $380 million. IG will also repay approximately $160 million of Underdog’s existing debt when the transaction closes.
On top of the acquisition price, eligible Underdog employees will participate in a management incentive plan with a maximum potential payout of $850 million, self-funded from Underdog’s own earnings and contingent on the company delivering at least $400 million in EBITDA by 2028 and $700 million by 2029. IG has lined up a bridge facility of up to $950 million with Barclays and Goldman Sachs to help finance the acquisition, and the deal is expected to close in late 2026 or early 2027, pending regulatory and antitrust approvals.
Underdog’s Rise in Prediction Markets
Underdog built its brand as a daily fantasy sports operator after launching in 2020, and it’s now live in 40 U.S. states. Since adding prediction markets to its platform in September 2025, the company has climbed to become the third-largest U.S. prediction markets venue by regulated notional volume flow, trailing only Kalshi and Robinhood. IG Group CEO Breon Corcoran called the acquisition “a defining step” for the company, saying it “establishes IG as a leader in U.S. prediction markets, one of the most significant opportunities across trading and entertainment, and accelerates our growth in the world’s largest and fastest-growing retail trading market.”
IG said the acquisition is expected to more than double its U.S. revenue and increase its U.S. monthly active customers more than tenfold, pairing Underdog’s young, mobile-first user base — nearly 1 million monthly active users, more than 60% of them under age 30 — with IG’s existing trading infrastructure. IG has no plans to change the Underdog brand, and the company will continue operating as a standalone business with its own management team and platform, reporting into Corcoran alongside IG’s tastytrade trading unit.
What Comes Next
IG has already signaled ambitions to expand Underdog’s prediction market categories well beyond sports, with plans to explore contracts tied to crypto, financial, macroeconomic, and political outcomes — a direct challenge to the broader footprint that Kalshi and Polymarket have staked out. IG also plans to use Underdog as an entry point into its wider trading ecosystem, funneling customers toward products like its tastytrade platform and international financial trading offerings. Financially, IG expects the deal to be broadly neutral to adjusted earnings per share in its first year before turning double-digit accretive by year three, with a return on invested capital that clears the company’s cost of capital by then as well.
Management also emphasized that a substantial portion of the consideration is tied to future performance rather than paid upfront, a structure IG’s finance team pointed to as a hedge against the fast-moving regulatory environment surrounding prediction markets in the U.S. Pro forma gross leverage is expected to land below two times EBITDA by the end of 2026, with deleveraging continuing after that. Underdog’s founders are set to receive roughly 2% of IG’s enlarged share capital at completion under the longest lockup terms, while a handful of institutional shareholders will receive a smaller stake with faster release schedules.
The acquisition also closes out the strategic review IG launched in March, alongside a proposed corporate redomicile to Jersey. IG has paused its share buyback program in the meantime and expects to resume repurchases in 2027, contingent on the redomicile, share price performance, and other capital needs. Alongside the announcement, IG reported an 18% jump in first-half revenue to £642.8 million (about $865.3 million), with core profit up 4% to £282 million, and said it remains on track to hit full-year expectations. For a company that entered the prediction markets race less than a year ago, Underdog’s ascent to the industry’s third-largest platform — and now a $1.3 billion price tag — underscores how quickly the sector has moved from a regulatory gray area to one of the most sought-after prizes in U.S. online trading and entertainment.