IG Makes Prediction Markets a Growth Priority With $1.3 Billion Underdog Deal

IG Group has agreed to buy Underdog, a US operator of prediction markets and daily fantasy sports, for up to about $1.3 billion, signalling a strategic bet on prediction markets as a core growth area. The deal substantially wraps up the strategic review IG launched in March. Completion is targeted for late 2026 or early 2027, subject to regulatory clearance.

Under the terms, IG will pay upfront consideration based on an enterprise value of about $1.1 billion, plus an earnout of up to roughly $200 million. IG expects the upfront equity value to be about $963 million, funded by approximately 24.1 million new shares and around $380 million in cash. A bridge facility of up to $950 million will cover the cash component, earnout and refinancing of about $160 million of Underdog debt. Separately, eligible Underdog employees could receive up to $850 million under a management incentive plan, which IG says will be funded from Underdog's earnings and is separate from the consideration to shareholders. That payout is conditional on Underdog generating EBITDA of at least $400 million in 2028 and $700 million in 2029.

The acquisition would give IG a vertically integrated US licence stack spanning a futures commission merchant, designated contract market and derivatives clearing organisation — covering brokerage, exchange and clearing. Underdog launched prediction markets in September 2025 and its own exchange in July 2026. IG says the infrastructure could also support contracts tied to crypto, financial and macroeconomic events, as well as cultural or political outcomes.

IG said the purchase would more than double its US revenue and lift US monthly active customers more than tenfold. Based on 2025 results, the US would have contributed about 40% of pro forma group revenue, versus 22% for IG on its own.

The deal was announced alongside IG's first-half update. IG launched nearly as many products and features in the six months to June as in all of 2025, including prediction markets on Tastytrade covering commodities, crypto, and economic and financial events. Total revenue rose 18% to £642.8 million. Active customers climbed 66% to 843,600 and first trades jumped 107% to 121,400, including acquisition effects; on an organic continuing-operations basis, active customers were up 13% and first trades up 74%.

IG expects the transaction to be roughly neutral to adjusted earnings per share in the first year and accretive at a double-digit percentage rate by the third year. Underdog will remain commercially standalone under its own brand, management and platform. IG's London listing would stay in place under the proposed parent holding company in Jersey.