IG becomes major player in Prediction Markets buying Underdog for $1.3 billion

IG Group (LON:IGG) has agreed to acquire Underdog Sports Holdings Inc, a US daily fantasy sports (DFS) and prediction markets operator, in a deal worth up to approximately $1.3 billion. The UK-based online broker said the acquisition marks a decisive step in its strategy to build a global consumer engagement platform at the intersection of trading, investing and entertainment.

The purchase consideration includes upfront payment based on an enterprise value of about $1.1 billion, partly settled through the issuance of new IG ordinary shares, plus an earnout of up to roughly $200 million tied to Underdog's 2026 net gaming revenue. Separately, eligible Underdog employees may receive payouts under a management incentive plan (MIP) capped at $850 million, self-funded from Underdog's earnings and tied to strong performance targets.

Underdog, founded in 2020, has grown into one of the largest DFS operators in the US. It launched prediction markets in September 2025 and is now the third-largest US prediction markets venue by regulated notional volume flow, behind Kalshi and Robinhood. The company reported net revenue of approximately $466 million in the 12 months ended 30 June 2026, up 21% year over year, and EBITDA of about $46 million in the three months to 30 June 2026.

IG said the deal should more than double its US revenues and increase US monthly active customers more than tenfold. Underdog brings a customer base of over five million depositing users drawn from more than 11 million registered accounts, along with a vertically integrated futures commission merchant, designated contract market and derivatives clearing organisation licence stack.

The acquisition is expected to be broadly neutral to adjusted earnings per share in year one and double-digit percentage accretive by year three. IG also said it has paused share buybacks with effect from its half-year results, and expects to resume them in 2027 subject to completion of its proposed redomicile and other capital demands. Completion is expected in late 2026 or early 2027, subject to US regulatory approvals and antitrust clearance.

IG Group CEO Breon Corcoran said technology is reshaping the high-engagement markets IG operates in, adding: "Underdog puts us at the front of that convergence." Underdog co-founder and CEO Jeremy Levine said joining IG would unlock the company's potential and help it become "the place to make predictions on sports and beyond."