IG Group has agreed to buy Underdog, the U.S. daily fantasy sports and prediction-markets operator, in a deal built around a fixed $1.1 billion upfront payment. The acquisition is intended to expand IG’s U.S. presence and add a younger, more mobile-focused customer base.
At that valuation, the transaction implies 2.4 times Underdog’s net revenue for the 12 months through June 2026. A separate report on the terms put the total consideration at up to about $1.3 billion, made up of the upfront value and about $200 million of earn-out.
IG said the deal also includes a capped earn-out tied to 2026 revenue and positive EBITDA, plus a separate management incentive plan for eligible employees based on EBITDA delivery in 2028 and 2029. That report said the employee plan could be worth up to $850 million if Underdog delivers at least $400 million of EBITDA in 2028 and $700 million in 2029.
The company said the target emerged from a strategic review launched in March that prioritised acquisitions meeting its M&A framework. Closing is expected in late 2026 or early 2027, subject to regulatory and antitrust approvals.
The purchase will be funded with new IG equity and debt, beginning with a bridge facility before longer-term financing is arranged. IG said it wants to preserve its investment-grade credit rating and keep its solvency ratio within a 160% to 200% target range.
IG also said Underdog’s founders are set to receive about 2% of IG’s enlarged share capital on completion, subject to the longest lock-up provisions. Five institutional shareholders are due roughly 3% in aggregate with faster release schedules, while smaller holders will be largely unrestricted.
Underdog has been growing quickly. IG said it generated $466 million in net revenue in the 12 months through June 2026, up 21% from the prior period, and had nearly 1 million monthly active users, up 39%.
In the second quarter, average monthly handle per active customer rose by more than 50% year on year and monthly active users were up by more than 60%, according to IG. It also said cumulative depositing customers climbed from slightly more than 14,000 in 2021 to just under 5 million at the end of 2025, while active annual customers increased to 3.2 million from 14,000.
Underdog’s prediction-market business remains relatively small, but IG said less than 1% of current handle comes from prediction markets even as it expects future activity to be 'very largely prediction markets, almost exclusively prediction markets.’ The company said Underdog launched prediction markets in limited form in September 2025, expanded to 30 states, and later introduced prediction-market parlays.
On 18 July, Underdog launched its own federally licensed prediction market exchange, wholly owned and operated by the company and licensed by the CFTC. IG said the business runs a vertically integrated stack that includes a futures commission merchant, a CFTC-licensed designated contract market exchange and a derivatives clearing organization, giving it control over product design, economics and risk management.
IG said Underdog is one of three fully vertically integrated providers competing meaningfully in sports prediction markets. Management also pointed to opportunities to scale products through tastytrade in the U.S. and, longer term, through IG’s existing licences abroad.
The acquisition would also reshape IG’s revenue mix. On a pro forma 2025 basis, the U.S. would account for about 40% of group revenue, compared with around 22% on a standalone basis, and DFS and prediction markets would represent 25% of combined revenue. IG said the pro forma average customer age would fall to about 34 from roughly 42.
