IG Group Might Pay Over $2 Billion for Its Prediction Markets Deal, and It's Only a “Funnel”

IG Group has agreed to buy Underdog, a fantasy sports and prediction-markets platform, in a $1.3 billion deal designed to create what the London-listed broker calls a "coherent customer funnel" for its next growth phase. IG will pay $1.1 billion upfront and $200 million in an earnout to Underdog shareholders. Eligible Underdog employees could receive up to an additional $850 million if the platform's EBITDA reaches $400 million in 2028 and $700 million in 2029.

CEO Breon Corcoran had signalled the move on a recent earnings call, saying IG was actively exploring prediction markets. Underdog will serve as the vehicle for that push and will also expand IG's US presence, which began with the roughly $1 billion acquisition of tastytrade in 2021. IG says it expects to more than double US revenue and increase monthly active US customers more than tenfold.

Underdog brings a large audience. It has over 11 million registered accounts, more than 5 million depositing customers and around 1 million monthly active users. IG, by comparison, has 1.4 million customers worldwide, with approximately 843,600 active. In the first six months of 2025, IG's US-centric businesses generated £103.4 million in revenue, up 18% year over year, while active US customers rose 11% to about 104,500, including 21,100 first-time traders.

Underdog started in fantasy sports, moved into sports betting in early 2024, closed that sportsbook in late 2025 and launched prediction markets in September 2025. The platform reported net revenue of about $466 million for the 12 months ended 30 June 2026, up 21%, with $122 million in revenue and roughly $46 million in EBITDA in the final quarter of that period. The $1.3 billion purchase price works out to about 2.4 times Underdog's trailing 12-month net revenue. IG expects the acquisition to be neutral to adjusted earnings in the first year and to add double-digit percentage accretion by year three, with a return on invested capital above IG's weighted average cost of capital in that timeframe.

IG's management views prediction markets as an evolution of binary-option products. Corcoran said earlier that prediction markets are "just a different title for what used to be binaries in Europe." Given the European Securities and Markets Authority's clarification that event contracts may be treated as binary options, gambling products or crypto-related products, IG will likely keep its prediction-markets business outside the EU. The broker has also said sports leadership could provide a base for non-sports contracts in areas such as crypto, financial, macroeconomic, cultural and political outcomes, opening a materially larger addressable market. On a pro forma basis, the US would account for around 40% of group revenue after the deal, versus 22% standalone, and prediction markets and fantasy sports would represent roughly 25% of combined net trading revenue.

IG is not the first CFD broker to move into event contracts: Plus500 previously became a clearing agent and offered event contracts directly through Kalshi, while IG chose the less-established Underdog as its partner.