IG Group to Buy Underdog in $1.3B Prediction-Markets Deal

IG Group, the FTSE 100 trading platform, has agreed to buy US daily fantasy and prediction-markets operator Underdog for as much as $1.3 billion, its largest move yet into the fast-growing but legally contested business of letting Americans trade on the outcome of real-world events.

The proposed acquisition, announced on July 30, 2026 alongside IG‘s half-year results, is the headline outcome of a strategic review the company opened in March 2026. Chief executive Breon Corcoran said the deal “establishes IG as a leader in US prediction markets” and speeds its growth in the world’s largest retail trading market. On completion, IG expects the purchase to more than double its US revenue and lift its US monthly active customers more than tenfold.

Breaking down the price

The headline number splits into distinct pieces, and only part of it is fixed. IG is paying an upfront enterprise value of about $1.1 billion, which nets to an equity value of roughly $963 million: 60% of that in about 24.1 million new IG shares, worth around 6.8% of the enlarged company, and about $380 million in cash. It will also repay some $160 million of Underdog’s debt when the deal closes. Sitting on top is an earnout of up to $200 million for Underdog’s shareholders, payable only if the business hits 2026 net gaming revenue targets and stays EBITDA-positive. The upfront figure values Underdog at 2.4 times its net revenue for the year to June 2026.

A separate management incentive plan could push the total as high as $2.15 billion. Eligible Underdog employees stand to share up to $850 million, but only if the company delivers earnings before interest, taxes, depreciation and amortization of at least $400 million in 2028 and $700 million in 2029, targets well above its current profitability. IG says that pot is self-funded from Underdog’s earnings and sits outside the price paid to sellers, a structure that keeps a large slice of the headline figure contingent on results IG has not yet seen.

What IG is buying

Founded in 2020, Underdog built its business on daily fantasy sports and is, by IG’s estimate, the second-largest operator in that market by revenue behind PrizePicks. It reported net revenue of about $466 million for the 12 months to June 2026, up 21% year on year, and swung to positive EBITDA of $59.6 million in the first half of 2026 after losing $52.8 million on that measure across 2025. It counts more than five million depositing customers and over 11 million registered accounts.

The bigger draw is Underdog’s push into prediction markets. Since launching the product in September 2025, it has become the third-largest US prediction-markets venue by regulated trading volume on IG’s numbers, behind Kalshi and Robinhood. In March 2026 it bought the entities behind a federally licensed exchange and clearing house, then took the operation fully in-house with its own exchange in July 2026. That gives Underdog the complete regulatory stack overseen by the Commodity Futures Trading Commission (CFTC): a brokerage, a designated exchange and a clearing organization, letting it list and settle its own contracts instead of routing trades through third parties.

An old alliance, and a conflict to manage

The deal reunites Corcoran with Underdog co-founder and chief executive Jeremy Levine. Corcoran ran Paddy Power Betfair (now Flutter) when it bought Levine’s earlier fantasy startup, DRAFT, in 2017. He also holds a personal stake of about 0.34% in Underdog, acquired in 2021 and 2023, before he joined IG as chief executive in December 2023. IG says its board knew of the holding, approved his role in negotiating the transaction, and had him recuse himself from the board’s formal vote to approve it.

The regulatory gate

For all the financial detail, this is an agreement, not a closed transaction. IG expects it to complete in late 2026 or early 2027, subject to US regulatory sign-off and the standard antitrust waiting period. The larger uncertainty sits with the product. Prediction markets occupy contested legal ground: the CFTC treats sports event contracts as federally regulated financial products, while a run of states argue they are unlicensed sports betting. Courts have split on the question, federal officials have warned operators over how they list contracts, and the fight is widely expected to reach the US Supreme Court.

IG’s own announcement flags the evolving regulatory landscape for prediction markets and daily fantasy sports as a risk, which helps explain why so much of the consideration hangs on future performance. Nor is IG alone in the wager: DraftKings (DKNG ) bought prediction-market startup Railbird in 2025, and rivals from FanDuel to Kalshi are chasing the same customers.

For IG, the logic is diversification. The acquisition would lift the US from about 22% of group revenue to roughly 40%, hand it a younger, mobile-first audience to funnel into tastytrade and its other platforms, and cut its reliance on any single product. To make room for the cost, IG paused its share buyback and is pressing ahead with a planned move of its holding company to Jersey. Whether the full $2.15 billion ever changes hands, though, will depend on prediction markets surviving the legal fight now moving through US courts.