IG Group adds predictions market capability with US$1.3 billion Underdog acquisition
London-based FTSE 100 derivatives trading company IG Group has agreed to acquire DFS and sports predictions platform Underdog for between US$1.1 billion and US$1.3 billion.
Underdog will continue to operate as a commercially standalone business, with its own brand, management team and operational platform.
The US$1.3 billion valuation includes an enterprise value of around US$1.1 billion, to be partly settled via IG shares, and an earnout of around US$200 million payable to Underdog shareholders.
In addition, Underdog employees will enter a management incentive plan with a maximum payout of US$850 million, contingent on outperformance. The maximum total payout would require Underdog to deliver EBITDA of at least US$400 million in 2028 and US$700 million in 2029.
The acquisition is expected to complete in late 2026 or early 2027, subject to it meeting relevant regulatory approvals and to the completion of due diligence processes.
The deal was dubbed “transformational in terms of scale” by sports and leisure analysts Regulus Partners, who pointed out that it adds over a million Underdog customers to IG’s existing approximately 100,000 in the US.
In a statement announcing the deal, IG said “Underdog’s brand equity gives it an advantaged position to consider expanding into crypto, financial, macroeconomic, cultural and political outcomes, opening a materially larger addressable market.”
The acquisition follows a strategic review by IG, which established an ambition to build a global consumer engagement platform capitalizing on the convergence of trading, investing and entertainment.
The deal is hoped to more than double IG’s US revenues and increase US monthly active customers more than tenfold.
IG said the deal is expected to be broadly neutral to adjusted earnings per share in year one, double-digit percent accretive by year three, and to deliver a return on invested capital in year three.
The firm said Underdog adds a low-cost customer-acquisition channel which it hopes to funnel from sports and prediction markets into active trading and derivatives on financial markets, increasing lifetime value and retention.
“Spanning the full trade lifecycle, it allows IG to internalize the economics across the value chain, complements the Group’s existing licenses and positions IG as a leading early mover in prediction markets, while providing optionality to enter the rapidly developing perpetual futures market,” the IG statement said.
“Technology is reshaping the large, high-engagement markets in which IG operates – and increasingly bringing them together, IG Group Chief Executive Breon Corcoran said. “Underdog puts us at the front of that convergence: a product-first team, a leading daily fantasy sports franchise and a full license 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.”
Underdog Co-Founder and Chief Executive Jeremy Levine added: “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.”
Underdog entered the prediction market space early last year, with the acquisition of derivatives firm Aristotle Exchange. At the same time, it laid off at least 125 employees, equating to more than 20% of its workforce, as it shifted the business toward prediction markets and AI.
Allwyn agreed a deal of a similar scale with its US$1.6 billion acquisition of daily fantasy sports PrizePicks in September 2025.
Dig Deeper
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The Backstory
Underdog’s fast pivot made it a scarce asset
IG Group’s agreement to buy Underdog for as much as $1.3 billion did not emerge from a conventional sports betting consolidation cycle. It followed a rapid redefinition of Underdog’s business from daily fantasy sports operator to a consumer prediction-markets platform with federal derivatives infrastructure, a large sports audience and ambitions beyond gaming.
That shift helps explain why a London-listed derivatives broker would pursue a U.S. fantasy sports brand. IG has long operated in trading and contracts-for-difference markets outside the U.S., while its American business remained comparatively small. Underdog brings a sports-first customer base, product team and regulatory pathway into a category where financial trading, fantasy sports and event-based speculation are beginning to overlap.
The acquisition also reflects a broader land grab around Commodity Futures Trading Commission-regulated event contracts. Companies from crypto exchanges to fantasy sports operators are seeking federally supervised licenses that could let them list contracts tied to sports, elections, economic indicators and cultural outcomes. For IG, Underdog offers a consumer brand and an exchange stack at a time when those assets are becoming strategically important.
The Aristotle deal changed Underdog’s position
Underdog’s most important step before the IG transaction was its move to buy Aristotle Exchange, a derivatives firm with CFTC-regulated market infrastructure. The company had initially entered sports event contracts through Crypto.com, which supplied the exchange rails behind its early rollout. By acquiring Aristotle’s designated contract market and derivatives clearing organization, Underdog moved from distribution partner to owner of core market plumbing.
That distinction matters. A platform that merely hosts another company’s contracts has less control over product design, settlement, economics and regulatory engagement. Through Underdog’s acquisition of Aristotle Exchange, the operator gained the ability to list and settle event contracts through its own regulated framework, including contracts linked to outcomes in the NFL, NBA, MLB and college football.
The timing underscored how abrupt the transition was. Underdog had cut at least 125 employees shortly before the Aristotle announcement, including roles across fraud operations, customer support, graphics, marketing and draft-based products. The reductions suggested a reallocation of resources away from parts of its legacy fantasy operation and toward prediction markets, automation and regulated exchange infrastructure.
For a potential buyer, that restructuring may have clarified the asset. Underdog was not simply a daily fantasy sports operator generating revenue from contests. It was becoming a federally connected event-contract business with a sports fan base, a technology platform and a management team willing to reshape the company around a new category.
Crypto.com helped prove the sports-contract model
Before it owned Aristotle’s infrastructure, Underdog used a partnership with Crypto.com to bring sports prediction markets to consumers. The arrangement allowed Underdog to offer contracts through Crypto.com Derivatives North America, a CFTC-registered entity, while using Underdog’s platform and technology to reach sports fans.
The partnership was notable because it targeted 16 states, including some where traditional online sports betting was not legal. That highlighted the central regulatory tension in the category: whether sports event contracts offered through federally regulated exchanges are financial products or functionally equivalent to sports wagers governed by state gaming laws.
The Crypto.com-Underdog sports prediction markets launch gave Underdog an early mover position among sports-facing consumer brands. Instead of bookmaker odds, users could buy and sell contracts whose prices moved with market activity. The format borrowed from trading interfaces while applying them to sports outcomes, creating a product that appealed to investors, sports fans and regulators for different reasons.
It also put Underdog into a competitive frame with companies such as Kalshi, Robinhood and Crypto.com, all of which have sought to normalize event contracts for mainstream users. Sports became the most visible use case because it combines high-frequency events, existing fan engagement and a customer base already accustomed to odds, spreads and fantasy contests.
Competition for CFTC pathways intensified
Underdog’s move came as other financial, crypto and gaming companies began pursuing CFTC-regulated structures to enter or expand prediction markets. The appeal is clear: federal derivatives oversight can offer a national framework, while state-by-state gaming regulation remains fragmented, expensive and politically uncertain.
Kraken’s $100 million purchase of Small Exchange from IG Group illustrated the same strategic logic from the crypto side. The acquisition gave Kraken a CFTC-licensed designated contract market and a foundation for U.S. derivatives products. A company spokesperson also confirmed interest in prediction markets after Kraken acquired the CFTC-licensed Small Exchange.
The fact that IG sold Small Exchange to Kraken and later moved to buy Underdog shows how quickly the market evolved. IG exited one CFTC-regulated exchange asset, then sought a larger consumer-facing platform with sports traction, customer acquisition capacity and prediction-market optionality. That shift suggests the prize was no longer simply the license. It was the combination of license, audience and product engagement.
Other operators were moving in parallel. PrizePicks pursued National Futures Association approval through a subsidiary as it prepared a predictions offering, while sports betting exchange RSBIX filed with the CFTC to become a designated contract market. Kalshi’s expansion into sports event contracts triggered disputes with state regulators, including Nevada, New Jersey and Massachusetts, over whether such contracts should be treated as sports betting.
Those conflicts remain central to the risk profile. State gaming regulators have argued that sports event contracts can constitute wagering even when listed on federally supervised exchanges. If courts or regulators narrow the scope of sports contracts, growth projections could be constrained. If federal authority prevails, companies with CFTC infrastructure and consumer distribution could gain access to a much larger addressable market.
Underdog built out leadership and compliance signals
Underdog’s corporate development before the IG deal also pointed to preparation for a more complex operating model. Shortly after launching event contracts, the company appointed Rishi Garg as chief financial officer and Kimberly Pointer Corbett as chief marketing officer. The hires added public-company, venture and consumer-brand experience as the company projected nearly $500 million in revenue in its fifth year.
The appointments followed a $70 million Series C funding round led by Spark Capital that valued Underdog at more than $1.3 billion, according to a company announcement at Business Wire. That valuation closely mirrors the headline value of the IG transaction, though the acquisition includes earnout and incentive structures tied to significant future earnings performance.
The company also strengthened its responsible gaming posture. Underdog became the first U.S.-based operator to integrate Sportradar’s Bettor Sense, an artificial intelligence tool designed to identify higher-risk play and route users to support. The move, described in Underdog’s integration of Sportradar’s Bettor Sense, was commercially relevant as well as compliance-focused. Prediction markets tied to sports will face scrutiny from both financial and gaming regulators, making player-protection tools a necessary part of market expansion.
For IG, these developments reduce but do not eliminate execution risk. Underdog brings growth, but also unresolved regulatory exposure, a business model in transition and ambitious profitability targets. The earnout and employee incentive plan show IG is paying for potential as much as current earnings. The strategic bet is that sports prediction markets will become a mainstream consumer trading category, and that Underdog’s audience can be extended into financial, political, cultural and crypto-linked outcomes.
The deal reflects convergence, not diversification
The significance of the acquisition is that it collapses several once-separate markets into one thesis. Fantasy sports supplied the audience. Crypto firms helped popularize exchange-based event contracts. CFTC licenses created a route around some limitations of state gaming laws. Trading platforms such as IG brought balance-sheet strength, risk management and experience in leveraged consumer financial products.
That convergence is why Underdog commanded attention from a FTSE 100 derivatives group. The company gives IG more than a U.S. sports product; it provides a bridge from entertainment to trading. If the regulatory environment holds, IG could use Underdog’s lower-cost customer acquisition funnel to introduce users to broader prediction markets and eventually financial derivatives. If regulators push back, IG may have paid a premium for a category whose boundaries remain unsettled.
The backstory, then, is one of acceleration. In less than a year, Underdog moved from fantasy sports operator to sports-contract distributor, then to owner of regulated exchange infrastructure and finally to acquisition target for a global trading company. IG’s wager is that this was not a short-term regulatory arbitrage, but the beginning of a new consumer market where sports fans trade outcomes the way retail investors trade stocks, crypto and derivatives.
