Stock image, for illustration only. Not related to the actual events.IG Group is buying Underdog for up to $1.3 billion, betting that the startup’s swift pivot from daily fantasy sports to prediction markets last year will unlock far more value than its original pick’em and best ball games ever could.
London-listed IG Group announced the deal Thursday, framing the acquisition as a gateway into the US prediction markets vertical. The purchase price reflects how quickly the market has shifted: Underdog launched in 2020 as a daily fantasy app built around pick’em and best ball contests, spent years navigating state-by-state regulatory fights over those products, then pivoted late last year into prediction markets and found itself with a nine-figure valuation nearly overnight.
“Prediction markets are one of the most exciting developments we’ve seen in a long time,” Underdog founder and CEO Jeremy Levine said in September 2025. “While still new and evolving, one thing is clear, the future of prediction markets is going to be about sports, and no one does sports better than Underdog.”
IG Group CEO Breon Corcoran made clear Thursday that sports is only the starting line. The company plans to scale Underdog’s platform “in time to come across financial markets, culture and politics,” Corcoran said on a webinar announcing the acquisition. “If sport is where Underdog has won, it’s not where the opportunity ends. The infrastructure is category-agnostic.”
Deal structure and market reaction
IG Group will fund the purchase largely by issuing more than 24 million new shares, which will make up 60% of the upfront equity payment and represent roughly 6.8% of the company’s enlarged share capital. The deal also includes a $450 million bridge facility to cover around $380 million in upfront cash to Underdog shareholders, up to $200 million in earnout payments contingent on revenue targets and positive 2026 EBITDA, and $160 million to repay Underdog’s existing debt.
Levine and co-founder Brandon Stakenborg will receive 1.5% of IG’s total stock, subject to vesting and a 24-month lockup. At current IG share prices, that stake would be worth more than $105 million.
Markets didn’t share the enthusiasm. IG’s share price dropped more than 14% Friday to close near 1460 GBX. The selloff came as New York filed a $36 billion lawsuit against rival prediction market operator Kalshi, raising fresh questions about the regulatory path ahead.
Revenue and standalone structure
Underdog disclosed net revenue of approximately $466 million for the year ending June 2026, a 21% increase from $380 million in the prior year. The company will remain commercially standalone with its own management team, a structure similar to Allwyn’s $1.5 billion acquisition of Underdog rival PrizePicks in September 2025.
IG Group also announced a management incentive program for certain Underdog employees worth up to $850 million through 2029. The company expects Underdog’s earnings to fund the program in cash but reserved the right to issue additional shares if needed. IG paused an active share buyback program until 2027.
Regulatory shift as strategic pivot
The regulatory angle is the real story. Underdog spent most of its first five years battling state regulators and legislators over the legality of its against-the-house pick’em DFS product, often labeled “DFS 2.0” by critics who argued it looked more like sports betting than traditional season-long fantasy contests. That fight played out state by state, market by market.
Prediction markets, by contrast, fall under federal oversight from the Commodity Futures Trading Commission, potentially offering access to a national market under a single regulatory regime rather than a patchwork of state rules. That shift from state-regulated DFS to federally regulated event contracts is the thesis behind IG’s bet, though it mirrors the same regulatory questions Kalshi and others are fighting over in court.
“We’ve proven we can build the best products no matter how the regulatory landscape shifts,” Levine said in a prepared statement. “It’s why we’ve taken off in prediction markets since we launched last year. Now, 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.”
The deal is expected to close in late 2026 or early 2027.
Key questions answered
How much is IG Group paying to acquire Underdog?
IG Group is buying Underdog for up to $1.3 billion. The deal includes upfront payments, up to $200 million in earnout payments based on revenue targets and positive 2026 EBITDA, and $160 million to repay existing debt.
What was Underdog’s original business before it pivoted to prediction markets?
Underdog launched in 2020 as a daily fantasy sports app focused on pick’em and best ball contests. It pivoted to prediction markets late last year after spending years fighting state-by-state regulatory battles over its DFS products.
Why does IG Group see prediction markets as more attractive than Underdog’s original business?
Prediction markets fall under federal oversight from the CFTC, potentially offering access to a national market under a single regulatory regime. This contrasts with the state-by-state regulatory patchwork Underdog faced with daily fantasy sports.
How did the stock market react to the acquisition announcement?
IG’s share price dropped more than 14% on Friday following the announcement. The selloff came as New York filed a $36 billion lawsuit against rival prediction market operator Kalshi, raising regulatory concerns.