IG Group Expands Into Prediction Markets With $1.1bn Underdog Acquisition

IG Group has sealed a deal to acquire US sports gaming company Underdog for $1.1bn, giving the FTSE 100 broker a larger position in prediction markets and daily fantasy sports.

The acquisition will transform IG’s US business while creating a platform for later international expansion. It also broadens the company beyond leveraged trading and investing into event contracts covering sports, politics, crypto, finance and culture.

Underdog launched prediction markets on its own exchange this month, adding another product to a business already established in daily fantasy sports. It will compete with Kalshi, Polymarket, FanDuel, DraftKings and Fanatics across a rapidly developing sector.

The agreement includes up to $200m in earnout payments linked to Underdog’s 2026 financial performance. A management incentive plan worth up to $850m will become payable only if the company reaches adjusted EBITDA of at least $400m in 2028 and $700m in 2029.

IG wants to diversify revenue through entertainment-led financial products

IG said the transaction would help it “diversify revenue” and “advance the convergence of trading, investing and entertainment, scalable through IG globally”.

The group operates in 19 countries across five continents, including the UK, Germany, Italy, Spain, Sweden, Switzerland, Poland and France. Six of those European markets signed a joint declaration targeting unlicensed event contract platforms.

Smarkets chief executive Jason Trost recently described exchanges and prediction markets as “not apples and oranges, they’re both apples”, arguing that the products are fundamentally similar.

Underdog brings scale and a valuable US licence stack

Underdog generated $466m in net revenue during the 12 months to June 2026 and has more than 11 million registered users, including over five million customers who have deposited funds. Revenue reached $250.1m during the first half of 2026, while adjusted EBITDA was positive at $59.6m.

“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,” said Jeremy Levine, Co-Founder and Chief Executive Officer of Underdog.

“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.”

Underdog also holds futures commission merchant, designated contract market and derivatives clearing organisation licences. This allows it to list contracts, clear trades and manage risk without relying on outside exchanges.

The company provides a route for IG into event contracts through its established consumer brand, existing technology and federal licences. Conversely, Underdog’s fantasy sports operation reduces dependence on prediction market expansion across the United States.

Acquisition gives IG a younger audience and greater US exposure

More than 60% of Underdog’s monthly active users are under 30, compared with an average customer age of 42 at IG. Cross-selling potential also influenced the deal. Around 58% of Underdog customers have traded individual stocks, 46% have traded crypto and 42% fund their wallets using crypto.

Around 30% of online sports gamers also trade options and futures. This creates opportunities to connect Underdog users with tastytrade, IG’s retail brokerage and financial education platform for active derivatives traders.

Regulatory risk explains the performance-linked deal structure

IG plans to expand prediction markets first through tastytrade in the US before considering a wider rollout through its international business. The transaction structure limits some of IG’s exposure by linking a significant portion of the consideration to Underdog’s future performance. 

Its established fantasy sports business also provides revenue if prediction markets face further legal restrictions. IG expects the acquisition to accelerate growth beyond its standalone target of at least 10% annual revenue growth after 2026. 

The deal should have little impact on adjusted earnings per share during the first year before delivering double-digit percentage growth by year three. “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.” 

The deal will be completed in late 2026 or early 2027, subject to approvals.

IG Group has acquired Underdog for $1.1bn to begin its foray into prediction markets despite regulatory uncertainty within the US. This deal is expected to boost the company’s annual revenue growth by 10% after 2026.