IG Group to Acquire Underdog in Deal Worth Up to $1.3 Billion, Targeting US Prediction Markets Leadership
Key Takeaways
- •IG Group will acquire Underdog for up to approximately $1.3 billion, including roughly $1.1 billion in upfront consideration and a $200 million earnout payable to Underdog shareholders.
- •A separate management incentive plan capped at $850 million will be made available to eligible Underdog employees, self-funded from Underdog's earnings and contingent on strong outperformance.
- •Underdog, founded in 2020, has become the third-largest US prediction markets venue by regulated notional volume flow, trailing Kalshi and Robinhood.
- •Underdog reported net revenue of approximately $466 million for the 12 months ended 30 June 2026, representing a 21% increase from the prior year.
- •The transaction is expected to be broadly neutral to IG's adjusted earnings per share in the first year following completion and double-digit accretive by the third year.
IG Group announced on Thursday that it has reached an agreement to acquire Underdog, a US-based daily fantasy sports and prediction markets operator, in a transaction valued at up to approximately $1.3 billion. The London-listed trading group, one of Europe's largest providers of contracts for difference (CFDs) and spread betting, described the move as a decisive step toward establishing itself as a leader in the rapidly expanding US prediction markets sector.
Under the terms of the deal, upfront consideration is based on an enterprise value of roughly $1.1 billion and will be settled partly through the issuance of new IG ordinary shares. In addition, an earnout of approximately $200 million will be payable to Underdog's shareholders.
IG Group also outlined a separate management incentive plan for eligible Underdog employees, capped at $850 million. The company stated that this plan would be self-funded from Underdog's earnings and would be contingent on strong outperformance.
Founded in 2020, Underdog has grown into one of the largest daily fantasy sports operators in the United States. The company expanded into prediction markets in September 2025 and has since become the third-largest US prediction markets venue by regulated notional volume flow, trailing Kalshi and Robinhood. US prediction markets, which operate under the regulatory framework of the Commodity Futures Trading Commission (CFTC), drew broad retail attention during the 2024 election cycle and have continued to grow as a trading category. For the 12 months ended 30 June 2026, Underdog reported net revenue of approximately $466 million, representing a 21% year-on-year increase.
IG Group Chief Executive Breon Corcoran said: "The acquisition of Underdog establishes IG as a leader in US 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."
The deal builds on IG Group's existing US operations, which include options and futures brokerage tastytrade, acquired by IG in 2021. The acquisition represents the principal outcome of a strategic review that IG Group announced in March. The company indicated that the transaction is expected to be broadly neutral to adjusted earnings per share in the first year following completion and double-digit accretive by the third year.
Completion of the deal is anticipated in late 2026 or early 2027, contingent on receipt of US regulatory approvals.
Source: LeapRate