IG Group's $1.3B Underdog Deal Reshapes US Prediction Markets

⏱ 3 min read

IG Group, the London-listed trading conglomerate, agreed on July 30–August 3, 2026 to acquire Underdog Sports Holdings for total consideration of up to $1.3 billion, the largest single investment yet placed on the US prediction markets sector. The deal hands IG the only fully integrated CFTC license stack—broker, exchange, and clearing house—operated by a sports-focused company, a regulatory position that rivals Kalshi and Robinhood have spent years assembling.

Underdog posted $466 million in net revenue for the twelve months ended June 30, 2026—up 21% year-on-year—and counts more than 5 million depositing customers across its daily fantasy sports and prediction markets apps. IG expects the transaction to more than double its US revenues and increase its US monthly active customer base by more than tenfold once the deal closes, targeted for late 2026 or early 2027 pending Hart-Scott-Rodino and regulatory approvals.

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Deal Structure

The $1.3 billion headline figure breaks down into an upfront enterprise value of approximately $1.1 billion—funded through roughly 24.1 million new IG ordinary shares plus a cash payment of $380 million—and the assumption and repayment of approximately $160 million of Underdog's existing debt. An earnout of up to $200 million is payable to Underdog shareholders if the company achieves positive EBITDA and net gaming revenue between $533 million and $600 million for full-year 2026.

IG's board described the transaction as "broadly neutral" to adjusted earnings per share in year one, projecting double-digit percentage accretion by year three, underpinned by cross-sell of IG's existing spread-betting and CFD products to Underdog's 11 million registered accounts.

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Underdog's Market Position

Underdog entered prediction markets in September 2025 via partnerships with Crypto.com and Kalshi, then moved aggressively to own the full value chain. In March 2026 it acquired Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc.—both CFTC-registered entities—and in July 2026 launched its own proprietary exchange, self-certifying its first seven event-contract templates covering baseball, basketball, and broader outcome markets.

That places Underdog third by regulated notional volume flow in US sports prediction markets, behind only Kalshi and Robinhood. Its daily fantasy sports operation—the original business—remains one of the largest in the country, giving it a captive funnel for prediction market adoption that neither Kalshi nor Robinhood can match.

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The CFTC Angle

The deal landed the same week the Commodity Futures Trading Commission proposed new ownership rules targeting the conflicts of interest that arise when a single entity controls an exchange, a clearing house, and market-making simultaneously. The proposed rules would:

• Bar affiliated market makers from accessing non-public exchange data, including order flow and customer positions.
• Prohibit preferential treatment on fees or order-matching priority for affiliated trading desks.
• Require physical and operational separation between exchange and affiliated market-making operations.

Critically, the proposals do not ban integrated ownership—they regulate it. That distinction matters for IG, which is acquiring an operator built around exactly that model and must demonstrate compliance before the deal clears CFTC scrutiny.

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Prediction Markets: Top Players Compared

Operator	CFTC License Stack	Sports Prediction Markets	US Volume Rank	Ownership
Kalshi	DCM + DCO + FCM	Yes	#1	Independent
Robinhood	DCM + DCO + FCM	Yes	#2	Public (HOOD)
Underdog (post-deal)	DCM + DCO + FCM	Yes	#3	IG Group (pending)
PrizePicks	None (DFS model)	No	N/A	Independent

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Impact on Operators and Bettors

For US bettors, the immediate practical effect is minimal. Underdog will continue operating as a standalone brand with its own management team while regulatory approvals are processed. The longer-term implication is consolidation at the top of a sector that barely existed eighteen months ago.

For rival operators, the deal signals that prediction markets are attracting institutional capital at valuations that dwarf typical sportsbook multiples. Underdog's implied revenue multiple of roughly 2.8× trailing net revenue will reset benchmark expectations across the space. Operators without a CFTC license stack now face a sharply steeper climb: the regulatory approval window is not accelerating, and the three companies that already hold the full stack—Kalshi, Robinhood, and Underdog—are either well-capitalized independents or, post-close, backed by a group reporting £642.8 million in first-half revenue.

Daily fantasy operators watching from the sidelines should note that Underdog's pivot from DFS to prediction markets took less than a year to generate enough traction to attract a $1.3 billion exit. That playbook is now visible to every competitor with an existing customer base and the capital to pursue a CFTC license stack.

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Sources

Primary and secondary sources consulted for this article, listed in order of primacy.

Technology is reshaping the large, high-engagement markets in which IG operates — and increasingly bringing them together.

— Breon Corcoran, Chief Executive Officer, IG Group · Acquisition announcement, August 2026