Trading and investments firm IG Group is to expand into the booming prediction markets space after agreeing to acquire Underdog in a deal worth up to $1.3bn (£960m).
The transaction, announced on Thursday, 30 July, comprises an upfront consideration of $1.1bn – equivalent to 2.4x Underdog’s net revenue for the trailing 12 months to June 2026 – and an earnout of around $200m payable to Underdog’s shareholders.
IG Group said Underdog is “well-placed” to capture the prediction markets opportunity, as one of a few firms alongside Kalshi and Robinhood to “compete meaningfully” in the sports events contract arena.
Eligible Underdog employees will take part in a management incentive plan (MIP) with a maximum potential payout of $850m, which IG Group said would be self-funded from Underdog’s future earnings and conditional on “strong outperformance”.
The top end of the MIP requires Underdog to achieve EBITDA of least $400m in 2028 and $700m in 2029, IG Group confirmed.
Underdog’s founders, Jeremy Levine and Brandon Stakenborg, will have 50% of any MIP payout settled in IG shares instead of cash, delivered over a period of approximately two years.
Founded in 2020 as daily fantasy sports (DFS) startup, the Brooklyn-based company branched out into prediction markets as a futures commission broker (FCO) in September 2025 through a deal with Crypto.com, a designated contract market (DCM) regulated by the US derivatives regulator, the Commodity Futures Trading Commission (CFTC).
Since launch, sports-focused Underdog has become the third-largest US prediction market by regulation notional volume – only behind Kalshi and Robinhood and ahead of Polymarket US and offerings from DraftKings and FanDuel.
Earlier this month, Underdog unveiled its own in-house exchange to power its prediction markets offering, just months after snapping up CFTC-regulated DCM and derivatives clearing organisation (DCO) Aristotle Exchange for an undisclosed fee.
The acquisition came just a week after the firm laid off at least 125 staff as part of the pivot to become a prediction market in the US. Its prediction markets product is currently available in 38 US states.
Armed with licences covering DCM, DCO and FCO, IG Group highlighted how Underdog has “moved decisively to capture this opportunity”.
IG Group has secured a $450m loan facility with Barclays Bank and Goldman Sachs to fund the deal and potential earnouts, as well as refinance Underdog’s existing debts, which are expected to be around $160m on completion of the transaction.
Underdog will run as standalone unit with its own brand, management team and operational platform, IG said.
Breon Corcoran, CEO of London-listed IG Group, said the acquisition establishes IG as a leader in US prediction markets. “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.”
Corcoran, the ex-CEO of Betfair, was instrumental in the £7m merger in 2016 between the exchange operator and Paddy Power to form Paddy Power Betfair, which later rebranded to Flutter Entertainment.
Levine founded DRAFT, a DFS platform acquired by Paddy Power Betfair in 2017 in a deal worth up to $48m.
As part of the IG Group announcement, it was revealed Underdog generated around $466m in net revenue in the prior 12 months to 30 June, which was a 21% increase on the $380m for the prior 12 months.
Net revenue and EBITDA amounted to roughly $122m and $46m, respectively, for the three months to 30 June, while there were 925,500 active users for the first six months of 2026.
Incredible leap
Commenting on the acquisition, CEO Levine said: “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.
“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.”
The acquisition is expected to complete in late 2026 or early 2027.
In a note, Regulus Partners said the deal was “transformational for IG in terms of scale, reach and direction”.
The strategic advisory firm added: “It is almost impossible for a business like IG to ignore the potential of prediction markets, especially given the involvement of Robinhood, which now dwarfs IG Group globally at $4.5bn revenue.
“However, using a largely DFS 2.0 operator as the foot in the door to the market is a bold move given that the product exists in a regulatory grey zone that the previous DFS leaders have not dared to enter and now faces both competitive and regulatory pressure.”
Underdog’s principal DFS rival, PrizePicks, was snapped up by Allwyn last year, with the pan-European lottery and gaming giant taking a 62.3% stake for $1.53bn.
The deal, which completed in January, valued the business at $2.5bn, while PrizePicks has also expanded into prediction markets in the US.
Analysis released earlier this month by Macquarie suggests prediction market trading volumes could reach $1.5trn by 2030, up from $22bn this year. Nearly half of the $1.5trn would be made up of sports event contracts, analysts at the investment bank noted.
In May, US market leader Kalshi hit a $22bn valuation after the VC-backed startup completed a Series F funding round, though it’s thought the founders are looking to raise fresh capital at a $40bn valuation.
On Wednesday, 29 July, management at Rush Street Interactive said on the operator’s Q2 earnings call that prediction markets aren’t impacting its sports betting business, BetRivers.
However, the company filed an application this past quarter with the CFTC to operate a DCM to “maintain its optionality” and not to be “caught flat-footed”, though the casino-first operator has no immediate plans to “lean into the crowded sports-focused” events contract space.
Elsewhere, prediction market ProphetX closed a $35m funding round this week with participation from FDJ United Ventures.
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London-headquartered retail trading giant says deal expands its addressable market and growth trajectory, while eligible Underdog employees in line for incentive scheme worth up to $850m
The post IG Group enters prediction markets space with acquisition of Underdog for up to $1.3bn first appeared on EGR Intel.