Buying a functioning operation is clearly preferable to waiting on legal clarity.
In +More: Binance set to enter the prediction market space.
We have earnings: FDJ United, MGM Resorts, Robinhood and more.
Puts+takes: Jefferies examines the cannibalization fears around Flutter.
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Woof: IG Group’s acquisition of Underdog sees the UK-listed retail trading group pay an upfront enterprise value of ~$1.1bn, plus a potential $200m earnout, for a business spanning DFS, prediction markets, brokerage, exchange and clearing.
For one sector commentator who requested anonymity, the transaction gives IG a “running start” in a market where both customer acquisition and product development will become increasingly expensive.
“The theory of M&A is you start at zero and you want to get to one,” they said.
IG could have attempted that itself, but doing so would have involved capital, time and uncertainty. Through Underdog, “they are buying time and certainty.”
That certainty applies to execution rather than the market itself. Underdog’s two principal products both face regulatory and competitive questions that IG cannot control.
Buying in: The upfront valuation represents 2.4x Underdog’s ~$466m of net revenue in the 12 months to June, up 21% YoY. The business generated $122m of revenue and $46m of EBITDA in Q2, having first become EBITDA-positive during Q1.
IG will issue ~24.1 million new shares to fund 60% of the consideration and pay around $380m in cash. It will also repay ~$160m of Underdog debt.
The earnout requires Underdog to generate 2026 NGR of between $533m and $600m while remaining EBITDA-positive.
Underdog shareholders are not exiting entirely: they will own ~6.8% of the enlarged IG.
A separate employee incentive plan could pay as much as $850m, but only if EBITDA reaches at least $400m in 2028 and $700m in 2029.
Who’s a good ’dog? Founded by Jeremy Levine in 2020, Underdog first established itself as the number-two operator in the pick’em-style DFS market. Its attempt to enter state-regulated sports betting was later abandoned.
However, the company subsequently found a route to national scale through federally regulated event contracts.
Underdog launched prediction markets in September 2025 and says it has become the third-largest US venue by regulated notional volume flow across prediction markets and DFS combination trades, behind Kalshi and Robinhood.
It has around one million average monthly active users, more than five million depositing customers and over 11 million registered accounts.
Prediction markets generated 54% of handle during H1.
Traction engine: Matt Restivo, CEO of OddsJam, said the deal was “no surprise” given Underdog’s execution and reputation as a partner. “What deserves more attention is the liquidity position they’ve built in prediction markets, behind only Kalshi and Robinhood since the fall,” he added.
“That traction doesn’t happen by accident.”
The scaffold: Crucially, Underdog also owns futures commission merchant, designated contract market and derivatives clearing organization licenses. Its proprietary exchange launched in July, creating a vertically integrated brokerage, exchange and clearing operation.
As the industry commentator put it, IG is buying “a sports-betting sensibility,” a full-stack platform, regulatory scaffolding and a complete operating team.
Two for the money: Paul Leyland of Regulus Partners suggested the valuation effectively offers IG two chances to win. “If DFS 2.0 comes under regulatory and competitive pressure but prediction markets thrive, or – less likely – vice versa, this will be a smart deal,” he said.
The problem arises if both propositions falter.
DFS pick’em products face growing regulatory pressure, partly because prediction markets have weakened the argument that they provide the only widely available alternative to state-licensed sportsbooks.
Sports-event prediction markets, meanwhile, remain embroiled in litigation over whether federal derivatives regulation preempts state gambling laws.
Un-picked: The obvious comparison for yesterday’s deal is PrizePicks, Underdog’s larger DFS rival. In September 2025, European lottery group Allwyn agreed to pay $1.6bn for a controlling 62.3% stake, valuing PrizePicks at $2.5bn.
A further performance-related payment of up to $1.55bn could take Allwyn to full ownership and lift the valuation to $4.15bn.
PrizePicks had generated $339m of adj. EBITDA in the preceding 12 months, producing an initial valuation of more than 7x EBITDA.
Against that benchmark, IG is paying less for Underdog: around 9x annualized EBITDA before the earnout.
But it is acquiring a business with a more developed prediction market position and its own exchange, brokerage and clearing infrastructure.
The Europeans are coming: The two transactions also follow the same strategic pattern: established European gaming and trading groups buying US sports engagement platforms rather than attempting to build consumer scale from scratch.
Leyland said it was “almost impossible” for IG to ignore prediction markets given Robinhood’s rapid expansion, but described using a DFS operator as its entry point as bold.
Underdog does not provide effortless growth either and Leyland noted IG itself grew revenue by 18% in H1, broadly matching Underdog’s recent rate.
The supposedly boring incumbent is not buying growth because its core business has stalled.
Madagascan varieties: What it is buying is optionality. The commentator believes prediction market products must become more entertaining than their current “vanilla” form, particularly because most customers will not win consistently.
Underdog’s consumer instincts and product development record may therefore matter as much as its licenses.
What is IG? IG began as a financial spread-betting business and remains best known for leveraged OTC products, particularly contracts for difference. It now offers a broader mix of stocks, options, futures and crypto, with around one-fifth of group revenue already generated in the US.
The Underdog acquisition will more than double that US revenue and increase IG’s monthly active US customers more than tenfold.
On a pro-forma 2025 basis, the US would have contributed ~40% of combined revenue, while prediction markets and DFS would have represented around one-quarter of group net trading revenue.
The strategic logic is convergence. IG can introduce Underdog’s sports-led audience to tastytrade’s options, futures, stocks and crypto products, while extending the acquired infrastructure into financial, political, cultural and macroeconomic contracts.
Life of Breon: This is not CEO Breon Corcoran’s first journey across the boundary between trading and betting. After beginning his career in derivatives trading at JP Morgan and Bankers Trust, he joined Paddy Power in 2001, eventually becoming chief operating officer.
He became Betfair CEO in 2012 and led the 2016 merger with Paddy Power, becoming chief executive of Paddy Power Betfair, the business renamed Flutter Entertainment in 2019.
He later led payments group Zepz before joining IG in 2024.
We got history: Corcoran also knows Levine. Paddy Power Betfair acquired Levine’s previous company, DRAFT, while Corcoran was CEO, and he invested personally in Underdog before joining IG. His fully diluted holding of ~0.34% was disclosed, and he recused himself from the IG board’s formal approval.
That history helps make the acquisition an educated gamble. Corcoran understands betting, exchanges, consumer trading and the founder on the other side of the transaction.
What neither he nor IG can know is how US regulators, courts and competitors will potentially redraw the market.
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+More
Binance.US plans to apply next month for a CFTC DCM license, paving the way for the crypto exchange to launch a prediction market. CEO Steven Gregory disclosed the plan at the Rare Evo conference in Las Vegas. The move would place Binance.US alongside Gemini, which secured a CFTC license earlier this year, and Coinbase, which partners with Kalshi. Binance.US operates separately from global exchange Binance Holdings and has lost significant US market share since 2023.
Read across
Someone to watch over me: The secondment of senior Department for Digital, Culture, Media and Sport official Sarah Fox to the UK Gambling Commission’s executive team is being interpreted by industry sources as an attempt to reinforce an embattled regulator, following senior departures and an increasingly public dispute over financial risk assessments. See yesterday’s Compliance+More.
+More careers
As announced ahead of Banijay’s H1 earnings this week, Antoine Jouteau has joined the gaming division as its new CEO. MGM China has appointed executive director Jenny Lau to CFO.
Finance Manager – London
HR Manager – Limassol
Growth Marketer – Remote
Earnings
Churchill Downs: The Kentucky Derby owner is seeking buyers for nine wholly owned regional casinos as it concentrates its portfolio around the Derby, historical racing machines and TwinSpires.
See today’s Earnings Extra edition, which will be sent later this morning. (PRO subs only).
Robinhood: The retail financial giant has set out an expansive vision for Rothera after its new exchange became a top-three DCM within weeks of launching.
See yesterday’s Earnings Extra edition (PRO subs only).
Rush Street Interactive: Q2 produced another record with revenue of $393.8m representing a whopping 46% YoY increase, as North American iCasino share gains, Latin American expansion and the World Cup produced its fastest growth in more than four years.
See yesterday’s Earnings Extra edition (PRO subs only).
MGM Resorts: MGM Resorts’ earnings quality was mixed: adj. EBITDA fell 6% as Macau weakened, while favorable table hold materially assisted the Strip’s return to growth.
See yesterday’s Earnings Extra edition (PRO subs only).
FDJ United: Underlying growth across much of FDJ’s portfolio of products was obscured by higher gaming taxes, weakness in the UK, EuroMillions jackpot volatility and exceptional weather in France.
See yesterday’s Earnings Extra edition (PRO subs only).
Banijay Gaming: Banijay Gaming generated €1.21bn of H1 revenue, up 10.5% YoY on a constant-currency pro forma basis, as the World Cup drove record acquisition and accelerated Q2 growth.
See Wednesday’s Earnings Extra edition (PRO subs only).
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Earnings in brief
VICI Properties: Q2 revenue of $1.1bn was up 5.7% while AFFO increased 7.8% to $679.6m. The REIT completed its $1.16bn acquisition of seven Golden Entertainment casinos and added Clairvest, Golden and Club Med as tenants. FY26 AFFO guidance was updated to $2.675bn-$2.695bn. It also acquired four Alberta assets for $141m.
Gaming & Leisure Properties: Revenue rose 9% to $430.5m, AFFO increased 10.1% to $304m and adj. EBITDA grew 12.2% to $405.5m. GLPI updated full-year AFFO guidance to $1.219bn-$1.225bn. H2 development funding is expected to reach $400m-$450m, taking annual spending to $750m–$800m. Leverage stood at 4.8x at quarter-end.
Codere Online raised its 2026 outlook after Q2 NGR rose 27% to €69.4m, supported by 25% growth in Spain and 24% in Mexico. Adj. EBITDA more than doubled to €5.8m, while active players increased 12%. The operator now expects full-year NGR of €255m-€265m and adj. EBITDA of €20m-€25m.
CIRSA reported an operating profit of €202m for Q2, up 8.3% YoY and extending its growth streak to 72 quarters. Revenue increased 10.1% to €637m, helped by recent acquisitions and broad-based growth. H1 revenue and EBITDA rose 9.1% and 8.4%, respectively, with CIRSA expecting FY performance at the upper end of its guidance range.
BetMakers: Q4 revenue of A$24.2m ($17m) was up 9.4% at constant currency, while adj. EBITDA surged 89.3% to A$4.5m and its margin reached 18.5%. Unrestricted cash increased sequentially to A$15.6m. Growth was driven by digital revenue and cost synergies at GT Vegas, which turned adj. EBITDA positive.
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Puts+takes – Flutter Entertainment
Told ya: Jefferies believes the prediction market cannibalization thesis surrounding Flutter is beginning to unravel, with evidence suggesting the new vertical is incremental to FanDuel rather than a material threat to its regulated sportsbook.
“Despite the narrative, we have consistently argued that material cannibalization was unlikely, given evidence from history, company commentary and data,” the analysts said.
The historical comparison is betting exchanges, which have “experienced declining market share over time” outside the US because they could not compete sustainably with sportsbooks on product, promotions or pricing.
In the UK, Jefferies noted, their market share has fallen from 10% to 4% since 2014.
Lucy in the sky with diamonds: Current US data also indicates relatively little direct competition. Flutter estimated a “LSD direct cannibalization impact on handle at most” in February and reiterated that assessment in May.
DraftKings data similarly suggested prediction markets represent only 1% of wallet deposits and adjusted sports-trading volumes, with any lost activity concentrated among lower-margin sharp bettors.
Geography provides further support, with Jefferies citing the EKG report that last week estimated 69% of prediction market sports activity originates in states without regulated online sports betting.
That leaves prediction markets with only a low- to mid-single-digit share in states where they compete directly with sportsbooks.
Upcoming earnings
Jul 31: Gaming & Leisure Properties (call)
Aug 3: Sportradar
Aug 4: Flutter, Brightstar, Accel, Red Rock, Wynn Resorts
Aug 5: Light & Wonder, ZEAL Networks
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