UK’s IG Group to Buy US Prediction Markets Operator Underdog in Deal Worth Up to $1.3 Billion

UK-listed trading platform IG Group has agreed to acquire U.S. daily fantasy sports and prediction markets operator Underdog in a deal worth up to $1.3 billion, marking the London-based firm’s biggest push yet into the fast-growing American prediction markets space. The agreement gives IG a major foothold in a category that has exploded in popularity as bettors look for new ways to trade on the outcomes of sports and real-world events, alongside traditional DFS apps like Underdog itself.

The transaction is structured around an upfront enterprise value of roughly $1.1 billion, with an additional earnout of about $200 million payable to Underdog shareholders if the company hits certain performance targets tied to 2026 revenue and profitability. That upfront price values Underdog at 2.4 times its net revenue of approximately $466 million for the 12 months through June 2026 — a figure that itself grew 21% year-over-year, underscoring how quickly the prediction markets category has scaled.

How the Deal Is Being Financed

The upfront equity value is expected to land around $963 million, funded through the issuance of about 24.1 million new IG shares alongside roughly $380 million in cash. IG will also repay approximately $160 million of Underdog’s existing debt once the deal closes. IG Group CFO Clifford Abrahams said the structure was designed to balance immediate value for Underdog’s ownership with upside tied to future performance, while the company reported an 18% jump in first-half revenue to £642.8 million (about $865.3 million) and a 4% rise in core profit to £282 million alongside the announcement.

IG said it expects the acquisition to be broadly neutral to adjusted earnings per share in its first year post-close before turning double-digit percentage accretive by year three — a timeline that suggests the company sees Underdog less as a quick financial win and more as a long-term platform play in a category it believes is still in its early innings.

Underdog’s Rapid Rise in Prediction Markets

Underdog built its name as one of the sharper operators in the DFS space before expanding aggressively into prediction markets, where users trade contracts tied to the outcomes of sports and other real-world events rather than placing traditional sports bets. That pivot has coincided with a broader surge of interest in prediction markets across the U.S., as regulatory questions around traditional sportsbooks and sweepstakes-style platforms have pushed both operators and bettors to explore alternative structures for wagering on outcomes.

For IG Group, a company built primarily around spread betting and CFD trading in the UK and other international markets, the acquisition represents a direct entry point into the U.S. retail trading boom. IG Group CEO Breon Corcoran said the deal “establishes IG as a leader in U.S. prediction markets, one of the most significant opportunities across trading and entertainment,” and accelerates the company’s growth ambitions in what he called the world’s largest and fastest-growing retail trading market.

Part of a Broader Strategic Shift

The Underdog acquisition arrives alongside IG’s proposed redomicile to Jersey, and the company says the combined moves bring closure to a strategic review it launched back in March. As part of the capital planning around the deal, IG has paused its share buyback programme, with repurchases expected to resume in 2027 pending completion of the Jersey redomicile, the company’s share price performance, and other capital requirements.

The move also lands at a moment when major players across sports betting and fantasy sports are jockeying for position in prediction markets, a category that regulators are still working to define alongside more established sportsbooks and fantasy operators. Underdog’s growth trajectory — and the premium IG was willing to pay for it — signals that established trading and betting companies see real staying power in the model rather than a passing trend.

Assuming the deal closes as structured, Underdog will operate under IG’s ownership while continuing to run its existing fantasy sports and prediction markets products in the U.S. Neither company has announced a target closing date, though IG indicated the transaction is expected to move forward alongside its other 2026 capital and corporate restructuring plans.