Underdog Bought by IG Group in Deal Worth Up to $1.3B

IG Group (LON: IGG), a UK-based trading platform provider, is acquiring Underdog for as much as $1.3 billion in a deal aimed at bolstering the buyer’s exposure to the fast-growing prediction market industry.

The financial technology company, a member of the FTSE 100 Index, is paying $1.1 billion upfront for closely held Underdog “and an earnout of approximately $200 million payable to Underdog’s shareholders.” Underdog staffers are also eligible to participate in a management incentive plan (MIP) “with a maximum potential payout of $850 million.” The MIP will be self-funded by Underdog earnings. The buyer believes the deal will double its U.S. revenue, boosting its active user count in this country by more than tenfold while growing earnings.

IG notes its guidance as a standalone entity is unchanged. The $1.3 billion purchase price is slightly higher than the $1.23 billion Underdog was valued following a March 2025 financing round in which it raised $70 million.

In Underdog, IG Sees Prediction Market Value

Underdog’s rapidly growing prediction market footprint was likely a source of attraction for IG. The deal was announced less than two weeks after Underdog unveiled its fully owned yes/no exchange.

Formerly a behemoth in the world of daily fantasy sports (DFS) and a player in online sports betting, Underdog was the first licensed sportsbook operator to pursue prediction markets, doing so through an October 2025 agreement with Crypto.com. In March, the gaming operator announced the acquisitions of Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO.

Those entities held the Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO) designations from the Commodity Futures Trading Commission (CFTC), meaning that by way of the Underdog acquisition, IG is purchasing “a valuable, vertically integrated license stack,” which allows it to move seamlessly into the U.S. event contracts arena.

It’s also acquiring a profitable company. Underdog, which IG said “will operate as a commercially standalone business, with its own brand, management team and operational platform to support delivery of the strategy,” posted second-quarter EBITDA of $46 million while growing revenue by 21% to $466 million for the 12 months ending June 30.

IG Sees Prediction Market Opportunity Beyond Sports

IG has over 1.3 million customers around the world across platforms including IG, tastytrade, Freetrade and Independent Reserve. The company provides access to equities and traditional investing strategies as well as exchange-traded and over-the-counter derivatives, indicating there are synergies with Underdog as well as opportunity to push the prediction market footprint beyond sports.

Interestingly, earlier this week, IG’s tastytrade unit announced its own prediction market push — one focusing on cryptocurrency, equity index and macroeconomic derivatives, not sports.