IG Group (LON: IGG), a prominent UK trading platform provider, is set to acquire Underdog for a maximum of $1.3 billion. This strategic move is designed to enhance IG’s presence in the rapidly expanding prediction market sector.
The fintech giant, listed in the FTSE 100 Index, will pay $1.1 billion initially for the privately held Underdog, alongside an earnout of around $200 million allocated to Underdog’s shareholders. Additionally, Underdog employees can participate in a management incentive plan (MIP) that offers a potential payout of $850 million, which will be financed by Underdog’s earnings. IG anticipates that this acquisition will double its revenue in the U.S., increasing its active user base there by over ten times while also enhancing profitability.
“The acquisition is projected to fast-track IG’s revenue growth, earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as adjusted earnings per share over the medium term, while expanding the Group’s market reach through Underdog’s rapidly expanding revenue sources,” the buyer stated.
IG asserts that its projections as a standalone company remain unchanged. The $1.3 billion purchase price is slightly above Underdog’s valuation of $1.23 billion, which was established following a financing round in March 2025 that raised $70 million.
IG Recognizes Underdog’s Prediction Market Potential
Underdog’s swiftly growing footprint in the prediction market space was likely a key factor for IG’s interest. The acquisition announcement occurred less than two weeks after Underdog launched its fully owned yes/no exchange.
Once a major player in daily fantasy sports (DFS) and online sports betting, Underdog was the first licensed sportsbook operator to venture into prediction markets, initiating this move through an agreement with Crypto.com in October 2025. In March, the gaming company also revealed its acquisition of both Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO.
These companies had earned the Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO) designations from the Commodity Futures Trading Commission (CFTC), implying that with the purchase of Underdog, IG is obtaining “a significant, vertically integrated license stack” that grants seamless access to the U.S. event contracts sector.
Moreover, IG is acquiring a profitable entity. Underdog, which IG stated “will function as a commercially independent business, maintaining its own brand, management, and operational framework to support its strategy,” reported a second-quarter EBITDA of $46 million alongside a 21% revenue increase, totaling $466 million for the year ending June 30.
IG Explores Prediction Market Potential Beyond Sports
With over 1.3 million global customers across platforms such as IG, tastytrade, Freetrade, and Independent Reserve, IG provides access to equities, traditional investment methods, and both exchange-traded and over-the-counter derivatives. This indicates potential synergies with Underdog as well as opportunities to expand the prediction market landscape beyond sports.
“The Board believes that leadership in sports provides a solid foundation for exploring non-sport contracts, leveraging the same regulatory framework to support contracts referencing cryptocurrencies, financial and macroeconomic data, cultural, and political events, thus significantly broadening the addressable market,” IG stated.
Interestingly, just this week, IG’s tastytrade unit made its own push into the prediction market sector, focusing on derivatives related to cryptocurrency, equity indices, and macroeconomic factors, diverging from sports.