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IG Group, the FTSE 100 financial technology company behind trading brands like tastytrade and IG, has agreed to acquire Underdog — the daily fantasy sports and prediction markets operator — for total consideration of up to approximately $1.3 billion. The deal, announced July 30, 2026, marks one of the largest bets yet on the fast-growing US prediction markets sector and hands IG a ready-made foothold in a category currently dominated by Kalshi and Robinhood.
Why the deal matters
Underdog has become one of the most closely watched names in the gaming space since it launched prediction markets in September 2025. In under a year, it has grown into the third-largest US prediction markets venue by regulated volume, trailing only Kalshi and Robinhood. For IG, the acquisition is a fast track into a market it describes as one of the most significant opportunities across trading and entertainment.
The strategic logic hinges on regulation. Underdog built its business on daily fantasy sports — a state-by-state, game-of-skill product whose contest formats limit what customers can actually wager on. Prediction markets, by contrast, operate under federal oversight from the Commodity Futures Trading Commission (CFTC), which opens the door to roughly 50-state coverage under a single regime rather than a patchwork of state rules.
That shift from state-regulated DFS to federally regulated event contracts is the core of the thesis, and it mirrors the same regulatory questions Kalshi and others are currently fighting over in court.
What IG is buying
Underdog brings a substantial customer base: roughly one million average monthly active users, more than five million depositing customers, and over 11 million registered accounts. It’s the second-largest DFS operator by revenue behind PrizePicks, and one of the fastest-growing.
Financially, the company has turned a corner. Underdog reported net revenue of approximately $466 million in the 12 months ended June 30, 2026 — up 21% year over year — and swung to profitability, posting around $46 million in EBITDA in the second quarter of 2026 after years of losses.
Perhaps the most valuable asset is regulatory infrastructure. Underdog has assembled a vertically integrated license stack — a brokerage, an exchange, and a clearing house — and launched its own proprietary exchange in July 2026. That combination puts it in rare company — alongside Kalshi and Robinhood, it’s one of only a few operators with the integrated capability to compete meaningfully in sports prediction markets.
The numbers behind the deal
The up-to-$1.3 billion figure breaks down into an upfront enterprise value of about $1.1 billion — settled through a mix of new IG shares and roughly $380 million in cash — plus an earnout of up to about $200 million tied to Underdog’s 2026 revenue performance. IG will also repay approximately $160 million of Underdog’s existing debt at completion.
Separately, a management incentive plan for Underdog employees is capped at $850 million, but that payout is heavily conditional: reaching the maximum would require Underdog to deliver at least $400 million in EBITDA in 2028 and $700 million in 2029 — a steep climb from current levels, and self-funded from the company’s own earnings.
Underdog will continue operating as a standalone business with its own brand and management team. Co-founder and CEO Jeremy Levine — who previously founded DRAFT (sold to what is now Flutter) and StarStreet (sold to DraftKings) — will report directly to IG Group CEO Breon Corcoran.
Beyond sports
While sports drive Underdog’s volume today, both companies are clearly eyeing a larger prize. IG’s leadership has signaled that leadership in sports prediction markets provides a platform to expand into contracts referencing crypto, financial and macroeconomic events, and cultural and political outcomes — the same categories where Kalshi and Polymarket have drawn attention.
The same exchange and clearing infrastructure also positions the combined group for the emerging onshore perpetual futures market.
One notable disclosure
The announcement includes a conflict-of-interest note worth flagging: IG CEO Breon Corcoran held a personal investment in Underdog — about 0.34% of its fully diluted share capital — acquired in 2021 and 2023, before he became IG’s CEO in December 2023.
Corcoran was also CEO of Paddy Power Betfair when it acquired Levine’s earlier company, DRAFT. Because of that stake, Corcoran recused himself from the board’s formal approval of the transaction, though he remained involved in negotiations and is supportive of the deal.
What happens next
The acquisition is subject to US regulatory approvals, including antitrust clearance under the Hart-Scott-Rodino Act, and is expected to complete in late 2026 or early 2027. IG has paused share buybacks while it absorbs the deal, with plans to resume in 2027.
For the prediction markets sector, the takeaway is bigger than any single company: a FTSE 100 financial institution paying north of a billion dollars for a DFS-turned-prediction-markets operator is a strong signal that traditional finance now views event contracts as a serious, durable market — not a passing trend. It also sets up a clearer three-way contest at the top of the US prediction markets space between Kalshi, Robinhood, and a newly IG-backed Underdog.
