U.K.-based financial technology company IG Group is expanding its U.S. footprint with a $1.3-billion agreement to acquire daily fantasy sports and prediction market operator Underdog.
Key Takeaways
- IG will pay $1.1 billion upfront as part of the $1.3-billion deal.
- IG plans to expand Underdog’s prediction market categories beyond sports and entertainment.
- Underdog will continue to operate as a standalone business.
IG announced the deal Thursday. It includes $1.1 billion in upfront consideration and comes less than two weeks after Underdog launched its in-house sports event contract exchange.
“The acquisition of Underdog establishes IG as a leader in U.S. prediction markets, one of the most significant opportunities across trading and entertainment, and accelerates our growth in the world's largest and fastest-growing retail trading market,” IG Group CEO Breon Corcoran said.
IG said it has no plans to change the Underdog brand, and the DFS and prediction market operator will continue as a standalone business with its own management team and platform.
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‘Incredible leap’
Underdog has become a leader in DFS since launching in 2020 and is available in 40 U.S. states, but the company’s pivot to a more prediction market-based platform made it incredibly attractive for IG, which announced a desire to create more revenue in the U.S. after a strategic review in March.
IG, which owns the tastytrade trading platform, said the Underdog acquisition will “more than double” U.S. revenue. Underdog, which added prediction markets to its platform in September 2025, is the third-largest U.S. prediction market exchange by trading volume behind Kalshi and Robinhood.
“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,” Underdog CEO and cofounder Jeremy Levine said. “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.”
Underdog reported net revenue of $466 million in the 12 months ending June 30, a 21% year-over-year increase. Before creating its own technology stack, Underdog relied on prediction market partnerships with Kalshi and Crypto.com.
Expanding offerings
IG cited Underdog's efficient customer acquisition model as a key reason for the acquisition. Levine said the deal will help Underdog scale faster and expand its products to more customers.
IG said it plans to use Underdog as an entry point into its broader trading ecosystem, directing customers toward financial trading through tastytrade and its international platform.
IG said it’s already evaluating expanding prediction markets into crypto, financial, macroeconomic, cultural, and political outcomes.
“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 U.S. prediction markets,” Corcoran said. “It expands both our addressable market and our growth trajectory.”
Deal details
IG said its upfront consideration is equivalent to 2.4 times Underdog's trailing 12-month net revenue through June 2026. Approximately $200 million will be payable to Underdog’s shareholders, subject to net gaming revenue targets and positive EBITDA for the year.
An expected $963 million in upfront equity value will be paid out on completion of the transaction, and IG will settle that by issuing 24.1 million new ordinary shares, along with a cash payment of $380 million. IG also agrees to repay $160 million of Underdog’s existing debt.
IG believes the deal will quickly accelerate revenue, EBITDA, and adjusted earnings growth and broaden the company’s addressable market.
“The acquisition is expected to be broadly neutral to adjusted EPS in year one, double-digit (percent) accretive by year three, and to deliver a return on invested capital in excess of IG's weighted average cost of capital in year three, in line with IG's capital allocation framework,” IG said in the release.
