Brit retail financial trader makes a definitive move into the predictions space.
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You got to be crazy: IG Group has agreed to acquire Underdog for up to $1.3bn in a deal that will more than double IG’s US revenue, increase its monthly active customers in the country more than tenfold, and give it a vertically integrated exchange, brokerage and clearing operation.
It also fulfils an ambition identified last July when CEO Breon Corcoran said IG was “actively assessing” prediction markets and transformational acquisitions.
You gotta have a real need: The deal to buy the DFS and prediction markets operator is based on an upfront enterprise value of ~$1.1bn, plus a potential $200m earnout.
The upfront valuation represents 2.4x Underdog’s net revenue of ~$466m for the 12 months to June 2026, which was up 21% YoY.
The business generated $122m of net revenue and $46m of EBITDA in Q2, having first turned EBITDA-positive during Q1.
Gotta sleep on your toes: The expected upfront equity value of $963m will be funded through ~24.1 million new IG shares, covering 60% of the consideration, and around $380m in cash. IG will also repay ~$160m of Underdog debt at completion.
The new shares will leave Underdog shareholders with ~6.8% of the enlarged IG share capital.
The $200m earnout is linked to Underdog producing 2026 net gaming revenue of between $533m and $600m while remaining EBITDA-positive.
And when you’re on the street: The deal is a remarkably direct fulfilment of the strategy outlined by IG in July last year. As E+M reported at the time, IG’s results presentation identified prediction markets and other adjacencies as a strong double-digit growth addressable market.
Corcoran told analysts IG was “actively assessing opportunities to enter fast-growing and uncorrelated product adjacencies.”
He described a global opportunity across OTC derivatives, stocks, futures, options, crypto and adjacencies worth hundreds of billions of pounds.
This was part, he said, of the “democratization of financial markets,” with innovation and consumer demand “driving convergence of financial markets with entertainment platforms.”
That convergence is now the central justification for the Underdog deal.
You got to strike when the moment is right without thinking: IG’s previous comments also pointed towards M&A as the likely means of entry. Corcoran said the company was considering opportunities “ranging from bolt-on deals to larger transactions to catalyze growth.”
The choice of Underdog suggests IG concluded that buying a customer base, brand and complete regulatory infrastructure was preferable to building from scratch or acting as an intermediary for an existing exchange.
It is also a decisive attempt to address Corcoran’s criticism that IG had “been a mono-product for a long time,” largely dependent on over-the-counter CFDs.
Prediction markets provide a new revenue stream that IG describes as largely uncorrelated with its traditional trading business.
And after a while, you can work on points for style: The acquisition also comes only 16 months after Underdog’s March 2025 Series C, which was the subject of another Earnings+More item under the headline ‘Hot dog’.
Spark Capital led that round with a $70m first close, with the total raise expected to exceed $100m.
It valued Underdog at $1.225bn pre-money, nearly three times the $485m valuation attached to its 2022 Series B.
At that stage, Underdog had raised $140m since being founded in 2020, with other backers including BlackRock, Acies Investment, Harris Blitzer Sports Entertainment, SV Angel, Mark Cuban and Kevin Durant.
Like the club tie, and the firm handshake: The valuation comparison is not entirely like-for-like: the 2025 figure was a pre-money equity valuation, while IG’s $1.1bn headline is an enterprise value incorporating Underdog’s capital structure.
Nevertheless, the $963m upfront equity value sits below the previous fundraising valuation.
Selling shareholders can reach ~$1.16bn through the earnout, before accounting for the future value of the IG shares they will receive.
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A certain look in the eye and an easy smile: In 2025, the fundraising story was one of an ambitious DFS challenger attempting to break into conventional sports betting. Founder Jeremy Levine, who had previously sold businesses to DraftKings and Paddy Power Betfair, had reportedly told employees he had no intention of “finishing third again.”
Underdog subsequently withdrew from state-licensed sports betting and found a more powerful route to national scale through federally regulated event contracts.
Less than a year after entering prediction markets, it is now being acquired largely because it has established itself as the third-largest US venue in the category.
You have to be trusted by the people that you lie to: Underdog launched prediction markets in September 2025 and, according to IG’s internal estimates, has become the third-largest US venue by regulated notional volume flow across prediction markets and DFS combination trades, behind Kalshi and Robinhood.
The company has approximately one million average monthly active users, more than five million depositing customers and over 11 million registered accounts.
Prediction markets accounted for 54% of its handle during the first half of 2026.
Owning it all: More importantly, Underdog owns the complete regulatory infrastructure required to operate independently: a futures commission merchant, designated contract market and derivatives clearing organization.
Its proprietary exchange launched in July, allowing it to control product development and internalize economics across brokerage, exchange and clearing.
IG believes that infrastructure can eventually support contracts covering crypto, financial and macroeconomic events, culture and politics.
It also provides optionality in perpetual futures and could potentially share infrastructure with tastytrade.
“The acquisition of Underdog establishes IG as a leader in US prediction markets, one of the most significant opportunities across trading and entertainment,” said Corcoran.
He added that Underdog puts IG “at the front of that convergence” through a combination of its product team, DFS franchise and regulatory licenses.
Everything trading: IG’s strategy mirrors the emergence of the “everything trading” propositions highlighted in E+M’s earlier coverage. Robinhood had already begun combining equities, options, crypto and prediction markets, while Coinbase was developing a wider ecosystem around crypto and event contracts.
IG’s response is to create its own funnel, taking customers from sports and prediction markets into tastytrade’s futures, options, stocks and crypto products.
Its research found that 58% of Underdog customers had traded individual stocks and 46% had traded crypto.
In the wider market, 44% of options and futures traders participated in sports prediction markets, while 63% also engaged in online sports betting.
On a pro-forma 2025 basis, the US would have accounted for ~40% of combined group revenue, compared with 22% for IG alone. Prediction markets and DFS would have represented around one-quarter of total net trading revenue.
The purchase will also more than double IG’s US revenue and increase its monthly active customers in the country more than tenfold.
Incentive to perform: Separate from the purchase consideration, eligible Underdog employees will be offered a management incentive plan worth as much as $850m.
The full payout would require Underdog to produce EBITDA of at least $400m in 2028 and $700m in 2029.
IG stressed that the plan would be self-funded from Underdog’s earnings and that meaningful payments would accrue only if the business delivered substantial growth.
IG expects the acquisition to be broadly neutral to adjusted earnings per share in its first year, double-digit percentage accretive by year three and to generate a return on invested capital above its weighted average cost of capital in year three.
Underdog will retain its brand, platform and management team, with Levine reporting directly to Corcoran.
There is also a personal connection. Corcoran was CEO of Paddy Power Betfair when it acquired Levine’s previous business, DRAFT, and invested in Underdog before joining IG.
He owns ~0.34% of Underdog on a fully diluted basis and will receive the same mix of cash and IG shares as equivalent shareholders.
Corcoran disclosed the holding and recused himself from the IG board’s formal approval of the transaction.
Party time: Corcoran admitted in July 2025 that IG had been “very, very late to the party” in crypto and was “several years off the pace.” He described the absence of crypto as a “gaping hole” in IG’s product range.
IG began filling that gap through its UK crypto launch, tastytrade’s US offering and the subsequent acquisition of Australian exchange Independent Reserve.
It has moved much more aggressively in prediction markets.
The purchase of Underdog is therefore more than another product addition.
It turns what was an adjacency in an investor presentation a year ago into a business capable of accounting for a quarter of the enlarged group’s trading revenue.
On hold: IG will pause share repurchases while leverage comes down, although it expects to be able to resume buybacks during 2027. Completion is anticipated in late 2026 or early 2027, subject to US regulatory and antitrust approvals.
The journey from a $485m DFS challenger in 2022 to a $1.2bn unicorn in 2025 and now the centerpiece of IG’s US strategy demonstrates how quickly both companies’ investment cases have changed.
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