FTSE 100 firm IG Group has agreed to acquire US sports company Underdog in a move which could hold big implications for a variety of sectors.
The deal will converge retail trading, prediction markets and sports gaming, positioning the UK-listed broker to capitalise on some of the world’s current fastest-growing areas.
Valued at $1.1bn (£810m), the acquisition is designed to transform IG Group’s US business while creating a platform that can eventually be rolled out internationally.
It also marks a major strategic shift for the company, broadening its focus beyond traditional leveraged trading and investing into prediction markets covering sports, politics, crypto, finance and cultural events.
Underdog launched prediction markets on its own exchange just this month. The firm, which is already a big name in the daily fantasy sports space, will now be looking to establish itself among Kalshi, Polymarket, FanDuel, DraftKings, Fanatics, and more, in the prediction market space.
The structure of the deal also includes up to $200m in earnout payments tied to 2026 financial performance and a management incentive plan worth as much as $850m, payable only if Underdog reaches ambitious EBITDA targets of at least $400m in 2028 and $700m in 2029.
What is IG Group planning?
IG Group said that it is looking to “diversify revenue” and “advance the convergence of trading, investing and entertainment, scalable through IG globally”.
This then begs the question: does the LSE-listed business see an avenue in which prediction markets enter the UK and other jurisdictions in Europe?
Firstly, it is important to note that IG Group is active in 19 countries across five continents.
This includes its home market of the UK, as well as countries such as Germany, Italy, Spain, Sweden, Switzerland, Poland and France.
Six of those countries signed a joint declaration targeting unlicensed event contract platforms.
The two that didn’t are the UK and Sweden. The UK has previously stated that prediction markets must be regulated under the same laws as gambling firms, while Sweden classifies the platforms as illegal gambling operators.
There are some nuances to this, however. Licensed UK operators such as Betfair and Smarkets run exchange-style operations.
Jason Trost, Chief Executive Officer at Smarkets, recently told SBC News that exchanges and prediction markets are “not apples and oranges, they’re both apples” – effectively implying that they are one in the same.
The company has even revamped its platform so that it now looks more akin to a popular prediction markets site like Kalshi or Polymarket.
This deal would mark the second time that a European-headquartered company has acquired a prediction markets platform.
Swiss firm Allwyn struck a deal for PrizePicks, which was completed in January this year, to take a majority stake valued at just under $1.6bn.
This was, however, just before the US operator moved into the predictions space.
UK regulators have pushed back on prediction markets given their controversial nature.
Markets on geopolitical affairs and cases of insider trading in the US have not helped the reputation of firms like the two mentioned in the above paragraph.
But Kalshi and Polymarket are still raking in the cash, and both have estimated valuations in the billions. Kalshi is also flirting with the idea of an IPO.
A potential pathway for prediction markets in Europe also recently opened, as Gibraltar created a prediction markets framework shortly after it licensed ADI Predictstreet and WagerWire.
The British Overseas Territory became the first jurisdiction to launch a regulatory regime just for prediction markets.
There are still plenty of hurdles for IG Group and Underdog to navigate before thinking about a prediction markets push in Europe, alongside the fact that there are plenty more layers to this deal.
Underdog’s established presence
Underdog generated $466m in net revenue during the 12 months to June 2026 and has built a customer base of more than 11 million registered users and over five million deposited customers.
The platform reported $250.1m in net revenue during the first half of 2026 while delivering positive EBITDA of $59.6m, demonstrating its improving profitability.
Originally established as a Daily Fantasy Sports (DFS) operator, Underdog is now leveraging its user base to enter the already-much-discussed prediction markets sector.
While DFS remains a substantial business – it generated more than $400m in net revenue for the firm during 2025 – it naturally limits the range of sporting products available.
“We built Underdog by creating the best experience for fans, and we’ve proven we can build the best products no matter how the regulatory landscape shifts. It’s why we’ve taken off in prediction markets since we launched last year,” said Jeremy Levine, Co-Founder and Chief Executive Officer of Underdog.
“Now, with our own exchange and by joining IG, we’re going to take an incredible leap in what we can offer customers and make Underdog the place to make predictions on sports and beyond.
“IG’s scale, expertise, resources and reach are going to unlock our potential, expand what we’ve built, and bring our products to more audiences. I couldn’t be more excited about what we’re going to do together.”
Prediction markets allow Underdog to expand into a much broader universe of sports contracts while also branching into financial markets, cryptocurrencies, macroeconomic events, politics and culture.
This branching out may prove to be both an opportunity and a dilemma for IG Group, with opportunities likely coming in the US, while the dilemmas arrive in Europe.
The allure of an acquisition
A key strategic attraction that IG Group stated is Underdog’s “valuable licence stack”.
The company is one of only three sports-focused operators to own the complete US regulatory stack, holding futures commission merchant (FCM), designated contract market (DCM) and derivatives clearing organisation (DCO) licences.
This enables Underdog to list its own contracts, clear trades internally and manage risk without relying on third-party exchanges.
The acquisition is also expected to drastically reshape IG Group’s customer profile.
More than 60% of Underdog’s monthly active users are under the age of 30, compared with IG Group’s existing average customer age of 42.
On a pro forma basis, the combined group’s average customer age is expected to fall to 34, supporting IG Group’s strategy of attracting a younger, mobile-first audience, who are much more aligned with the age demographic for prediction markets users.
The transaction will also materially increase IG Group’s exposure to the US market, with the region expected to account for around 40% of combined revenue compared with 22% currently.
Cross-selling opportunities are also there – 58% of Underdog customers have traded individual stocks, 46% have traded cryptocurrencies and 42% already fund their wallets using crypto.
Meanwhile, around 30% of online sports gamers also trade options and futures, creating opportunities to cross-sell products between Underdog and IG Group’s existing platforms, including tastytrade – an online retail brokerage and financial educational network built specifically for active derivatives, options and futures traders.
Predictions… and the fallback
The company has stated its intentions to expand its prediction markets offering first through tastytrade in the US before rolling it out more broadly via IG over time. Whether that point of rollout will be reached is something only time will tell.
Exchange-traded sports contracts also continue to face legal challenges from 16 US states, although the Commodity Futures Trading Commission (CFTC) – the regulator – is defending its federal authority over the products.
IG Group has looked to mitigate this uncertainty by structuring much of the consideration around future financial performance while relying on Underdog’s established DFS business to provide a stable revenue base, regardless of the prediction market situation.
Financially, IG Group expects the acquisition to accelerate growth beyond its standalone guidance of at least 10% annual revenue growth after 2026.
The acquisition is expected to have little impact on adjusted earnings per share in its first year, before delivering double-digit percentage growth by the third year.
Underdog’s founder-led management team will remain central to the business following completion, while IG Group CEO Breon Corcoran also disclosed a personal investment of approximately 0.34% in Underdog that predates his appointment and was approved by the company’s board.
Subject to regulatory and antitrust approvals, the transaction is expected to complete in late 2026 or early 2027.
Corcoran added: “Technology is reshaping the large, high-engagement markets in which IG operates – and increasingly bringing them together.
“Underdog puts us at the front of that convergence: a product-first team, a leading daily fantasy sports franchise and a full licence stack that together give us a differentiated position in US prediction markets.
“It expands both our addressable market and our growth trajectory. We are delighted to welcome Jeremy and the Underdog team to IG.”
