Shortly after announcing its fully vertically integrated, CFTC-regulated prediction market exchange, Underdog is snatched up in its entirety.
The UK’s IG Group is making a decisive move by agreeing to acquire Underdog in a deal valued at up to $1.3 billion. By announcing the agreement on July 30, the company is securing a strong position by combining its trading strengths with Underdog’s established user base and product innovation. This transaction aims to accelerate growth through deeper market access and expanded offerings for traders.
The structure features an upfront enterprise value of approximately $1.1 billion plus an earnout of about $200 million linked to Underdog’s 2026 performance. Reaching the earnout requires positive EBITDA and specific net gaming revenue targets. IG Group will settle the expected $963 million upfront equity value by issuing roughly 24.1 million new shares and paying about $380 million in cash, while also repaying approximately $160 million of Underdog’s debt at closing.
CEO Breon Corcoran stated that the acquisition establishes the firm as a leader in prediction markets and accelerates growth in the world’s largest and fastest-growing retail trading market. Underdog will continue to operate as a standalone brand with its current management team, preserving the company culture that has driven its rapid growth and recent momentum.
Deal Structure and Financing for the IG Group Underdog Acquisition
Supporting the cash elements, IG Group has arranged a bridge facility of up to $950 million with Barclays Bank PLC and Goldman Sachs. This arrangement maintains balance-sheet flexibility during the integration period. In parallel, eligible Underdog employees can participate in a management incentive plan capped at $850 million. The plan is self-funded from future earnings and requires Underdog to achieve at least $400 million in EBITDA in 2028 and $700 million in 2029.
Acquisition completion is expected in late 2026 or early 2027, subject to regulatory and antitrust approvals. The company projects the deal will remain broadly neutral to adjusted earnings per share in the first year and deliver double-digit percentage accretion by the third year. Return on invested capital is also expected to exceed the group’s weighted average cost of capital within that timeframe.
Underdog’s first-half 2026 results provide a clear foundation, showing $250.1 million in revenue and $59.6 million in positive EBITDA. This represents a strong recovery from the previous full-year EBITDA loss of $52.8 million on $441.2 million in revenue. These figures highlight the improvement in operational efficiency as the business scales.
IG Group has paused its share buyback program to prioritize capital for the transaction, with potential resumption in 2027 depending on share price performance and other demands. Full-year guidance for the existing business remains unchanged and aligned with market expectations.
Underdog’s Rapid Progress and User Growth
Underdog entered the prediction markets space in September 2025 and launched its own federally regulated exchange on July 18, 2026. Completing this step delivered a full licensing stack covering futures commission merchant, designated contract market, and derivatives clearing organization roles. The vertical approach allows traders to access daily fantasy sports and event contracts seamlessly.
IG Group estimates that Underdog now ranks as the third-largest venue by regulated notional volume flow. Monthly active users averaged about 952,500 in the first half of 2026, with more than 60% under age 30 and primarily mobile-first. The platform has also onboarded 5 million deposit customers and over 11 million registered accounts.
These demographics create an efficient channel for customer engagement. Upon completion, the acquisition is projected to more than double IG Group’s relevant revenues while increasing monthly active customers more than tenfold. The young, high-engagement audience offers natural opportunities for introducing complementary trading products over time.
Corcoran previously held a small early-stage equity stake in Underdog, adding familiarity with the team and operations. Combined with Underdog’s demonstrated pace of innovation, this background supports expectations of faster product development across the combined group.
Strategic Benefits for Traders and Future Growth
Traders are set to benefit from expanded product choices and improved liquidity as the businesses integrate. Underdog’s sports-focused event contracts pair well with IG Group’s broader derivatives and investment capabilities, enabling smoother pathways for users exploring additional markets. At the same time, keeping Underdog independent protects the product velocity and user experience that have attracted its current base.
The transaction forms a central part of IG Group’s strategic review. It is designed to raise the combined revenue growth rate above previous organic targets through Underdog’s stronger double-digit trajectory. By uniting regulatory licenses, technology, and a highly engaged audience, the company is positioning itself to capture rising volume while continuing to innovate.
References
- Reuters: UK’s IG Group agrees to buy sports gaming firm Underdog for up to $1.3 billion
- iGaming Business: IG Group makes billion dollar punt on Underdog in move into prediction markets
- Sportico: Underdog Sale: What IG Group’s Agreement Says About Betting Company
- Legal Sports Report: Underdog Bought By IG Group For Up To $1.3 Billion
- Investegate: Proposed acquisition of Underdog
- Finimize: IG Group Buys Underdog To Break Into US Prediction Markets
- DeFi Rate: IG Group to Acquire Underdog for Up to $1.3 Billion in Major US Prediction Market Push
- iGaming Expert: IG Group’s $1.3bn Underdog plan for prediction market burst
- IG Group Press Releases
- SBC News: IG Group agrees $1.1bn Underdog deal in predictions push
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