IG Group Bets Big on Prediction Markets with Potential $2.15 Billion Underdog Acquisition
IG Group (LON: IGG) is diving headfirst into the prediction markets through an acquisition of Underdog that could eventually top $2.15 billion. While the base deal stands at $1.3 billion ($1.1 billion upfront plus a $200 million earnout), IG could pay up to an additional $850 million to eligible employees if Underdog meets ambitious EBITDA targets of $400 million in 2028 and $700 million in 2029.
The deal wasn't unexpected—CEO Breon Corcoran had previously teased an interest in prediction markets—but IG’s strategic intent is clear: to build a customer conversion pipeline that shifts users from sports betting and event contracts to core financial trading.
Driving Growth in the U.S. Market
The acquisition is a massive push to expand IG’s footprint in the United States, following its $1 billion purchase of tastytrade in 2021. IG projects the deal will more than double its U.S. revenue and boost its active user base in the region tenfold.
Before this deal, IG’s U.S. operations showed steady growth, earning £103.4 million in revenue during H1 2025 (up 18% year-over-year) with roughly 104,500 active U.S. clients. However, Underdog provides scale on a completely different level:
- IG Group (Global): ~1.4 million total registered users, 843,600 active users.
- Underdog: Over 11 million registered users, 5+ million depositing users, and ~1 million monthly active users.
Combined, the U.S. market would leap from 22% to 40% of IG’s overall group revenue, with prediction markets and fantasy sports accounting for 25% of total net trading revenue.
Regulatory Positioning: Binary Options by Another Name
Corcoran views prediction markets as modern iterations of traditional binary options or European betting exchanges. Because European regulators (ESMA) strictly classify event contracts as binary options, gambling, or crypto-adjacent instruments, IG is expected to operate its new prediction market venture strictly outside the EU.
Underdog’s Background and Financials
IG isn't the first broker to pursue this space—competitor Plus500 previously entered the market as a clearing agent via a partnership with Kalshi. IG, by contrast, acquired Underdog, an entity with a shifting model:
- Origins: Started in fantasy sports before briefly offering sports betting in 2024 (which it shuttered by late 2025).
- Pivot: Launched event contracts in September 2025.
- Performance: Generated $466 million in net revenue for the 12 months ending June 30, 2026 (a 21% YoY increase). In Q2 2026, it brought in $122 million in revenue and ~$46 million in EBITDA.
The $1.3 billion base price represents a reasonable 2.4x multiple of Underdog's trailing twelve-month revenue.
Turning Sports Bettors into Traders
IG plans to leverage Underdog’s sports-focused audience as an entry point to introduce broader event contracts—covering crypto, economics, and politics—and ultimately bridge those users into mainstream financial markets.
Financially, IG expects the deal to be earnings-neutral in year one, achieve double-digit earnings growth by year three, and exceed its weighted average cost of capital within three years.