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IG Group has agreed to buy Underdog for up to $1.3 billion, giving the UK trading company a direct route into US fantasy sports and prediction markets. Underdog will retain its brand, platform and management team after the deal closes.
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IG sees Underdog as a bridge between sports predictions and financial trading. The group plans to introduce eligible Underdog customers to tastytrade and could add contracts linked to crypto, politics, culture and economic data.
“The acquisition of Underdog establishes IG as a leader in U.S. prediction markets, one of the most significant opportunities across trading and entertainment, and accelerates our growth in the world’s largest and fastest-growing retail trading market,” IG Group CEO Breon Corcoran said.
Underdog launched its own federally regulated exchange on July 18, less than two weeks before IG announced the purchase. The company previously delivered event contracts through Kalshi and Crypto.com but can now clear and list products through its own infrastructure.
That exchange gives IG a full US prediction market operation alongside a daily fantasy sports business available across 40 states. Underdog revenue rose 21% year over year to $466 million during the 12 months ending June 30.
“We built Underdog by creating the best experience for fans, and we’ve proven we can build the best products no matter how the regulatory landscape shifts,” Underdog CEO and cofounder Jeremy Levine said. “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.”
IG will pay an estimated $963 million in equity value at completion through 24.1 million new shares and $380 million in cash. The company will also repay about $160 million in Underdog debt. Shareholders could receive another $200 million if the business meets net gaming revenue targets and records positive EBITDA.
IG expects a broadly neutral effect on adjusted earnings per share during year one. Management forecasts a double digit percentage increase by year three, subject to completion and later financial performance.
No. IG plans to keep the Underdog name, platform and existing management structure.
Underdog combines fantasy sports customers, an efficient acquisition model and a federally regulated prediction market exchange.
The deal includes $1.1 billion upfront and up to $200 million in performance payments.
The companies have not provided a final completion date. The transaction remains subject to regulatory and shareholder approvals.