IG Group has agreed to acquire US daily fantasy sports and prediction markets operator Underdog Sports Holdings Inc for total consideration of up to approximately $1.3 billion, marking the London-listed broker’s most significant move into the rapidly expanding US consumer prediction markets category.
The deal comprises an upfront enterprise value of approximately $1.1 billion – equivalent to 2.4x Underdog’s last-twelve-months net revenue to June 2026 – plus an earnout of up to $200 million payable to Underdog shareholders, subject to 2026 net gaming revenue targets and positive 2026 EBITDA. The upfront equity value is expected to be approximately $963 million, settled through the issuance of around 24.1 million new IG ordinary shares and approximately $380 million in cash, with IG also repaying roughly $160 million of Underdog’s existing debt at completion.
Separately, eligible Underdog employees will participate in a management incentive plan capped at $850 million – self-funded from Underdog’s earnings – with the maximum payout conditional on the business delivering EBITDA of at least $400 million in 2028 and $700 million in 2029. The MIP does not form part of the consideration payable to selling shareholders.
Underdog reported net revenue of approximately $466 million for the twelve months ended 30 June 2026, up 21% year-on-year, with quarterly EBITDA reaching $46 million in Q2 2026. Since launching prediction markets in September 2025, it has become the third-largest US prediction markets venue by regulated notional volume flow – behind Kalshi and Robinhood – operating across 30 states and holding a vertically integrated FCM, designated contract market, and derivatives clearing organisation licence stack.
Strategic Rationale and Licence Value
That integrated licence stack is central to IG’s rationale. Rather than building exchange and clearing infrastructure from scratch, IG is acquiring an operator that already controls the full trade lifecycle under CFTC federal oversight – a scarce position in a market where regulatory approval to operate event contracts remains difficult to obtain. The structure allows Underdog to offer federally regulated single-outcome positions and parlay-style combinations across approximately 50 states under one regime, in place of the fragmented state-by-state DFS framework.
IG CEO Breon Corcoran described the acquisition as positioning the group at the front of the convergence between trading, investing, and entertainment, adding that Underdog’s product-first team and full licence stack give the enlarged group a differentiated position in US prediction markets. Jeremy Levine, Underdog’s co-founder and CEO, said the combination would allow the company to take a significant leap in what it can offer customers and bring its products to more audiences.
IG expects the deal to more than double its US revenues and increase US monthly active customers more than tenfold. The acquisition is guided to be broadly neutral to adjusted EPS in year one and double-digit percentage accretive by year three, with return on invested capital expected to exceed IG’s weighted average cost of capital by that point. IG has paused its share buyback programme with effect from its half-year results published 30 July, expecting to resume in 2027.
The broader regulatory environment IG is entering carries its own complexity. Prediction markets have drawn scrutiny from state legislators and tax authorities across multiple jurisdictions, and the category continues to face political pressure at the federal level. IG’s bet is that CFTC federal oversight provides a more stable and scalable regulatory foundation than the patchwork of state gaming regimes governing traditional DFS.
The acquisition is a key outcome of IG’s strategic review announced on 19 March 2026. IG will provide further detail on its refreshed strategy and capital allocation framework at a Strategy Update scheduled for 22 October 2026.
Source: FX News Group
Petra Vanhoof has spent the better part of a decade following the shifting tides of gambling regulation across Europe and beyond. She came up through the compliance side of the industry before pivoting to writing, which gives her a grounded, no-nonsense perspective on the rules, loopholes, and political maneuvering that shape how operators actually do business. She is particularly drawn to the gap between what regulators say and what the market ends up doing in response.