IG Group Pays Up to $1.3bn for Underdog, and Its Shares Drop 14% the Next Day

IG Group is paying up to $1.3 billion for Underdog Sports, the largest bet yet by an established broker that prediction markets are the next distribution layer for US retail trading. The London-listed fintech announced the acquisition on July 30, and the market's verdict arrived the next day: IG shares closed down more than 14% at 1460 GBX (about $19.62).

The price bought a company that looks nothing like what it was two years ago. Underdog launched in 2020 as a daily fantasy app built around pick'em and best-ball contests, pivoted to prediction markets late last year, and disclosed net revenue of roughly $466 million for the year ending June 2026, up 21% from $380 million the year before. It is now the third-largest US prediction market exchange by trading volume, behind Kalshi and Robinhood, and was the first licensed sportsbook operator to move into the category through an October 2025 agreement with Crypto.com.

How the deal is built

IG is funding the purchase largely in paper, issuing more than 24 million new shares that make up 60% of the upfront equity payment and about 6.8% of its enlarged share capital. A $450 million bridge facility covers the cash side.

The incentive program is the line that deserves attention: up to $850 million by 2029 on top of the purchase price, which IG expects Underdog's earnings to self-fund in cash while reserving the right to issue more stock if they do not. IG also paused an active share buyback until 2027. The deal is expected to close in late 2026 or early 2027, is projected to be EPS-neutral in year one and double-digit accretive by year three, and would more than double IG's US revenue while lifting US monthly active customers more than tenfold, taking America to roughly 40% of group revenue on a pro forma basis from 22% today.

IG's stated plan is to push the platform past sport. "If sport is where Underdog has won, it's not where the opportunity ends," CEO Breon Corcoran said on a webinar announcing the deal. "The infrastructure is category-agnostic." He expects to scale it "in time to come across financial markets, culture and politics." Underdog stays commercially standalone with its own management, a structure that mirrors Allwyn's $1.5 billion acquisition of Underdog's rival PrizePicks in September 2025.

The pivot that made it sellable

Underdog's value came from abandoning the regulatory model it was built on. The company spent most of its independent life fighting state legislators and gaming regulators over its against-the-house pick'em product. So-called DFS 2.0 operators including Underdog and PrizePicks absorbed cease-and-desist orders across multiple states through 2023 and pulled the player-versus-house format from many of them after the 2024 Super Bowl, while FanDuel and DraftKings, which had won the "game of skill" fantasy argument years earlier, attacked from the other side. "There are companies today posing as fantasy-sports operators, and they are running illegal sportsbooks," FanDuel state government relations head Cesar Fernandez said at NCLGS in summer 2023.

Founder Jeremy Levine, who sold StarStreet to DraftKings in 2014 and DRAFT to Paddy Power Betfair in 2017, answered publicly at the time: "They've seen our company, and others, produce superior products, more exciting user experiences, and begin to challenge them for sports fans' attention, and they're scared that we will challenge their market positions. We're already bigger than they are in fantasy. Frankly, they should be scared." DraftKings co-founder Matt Kalish posted praise for Levine on the day the IG deal was announced.

The company then walked away from licensed sports betting entirely. Underdog had launched online sportsbooks in North Carolina and Missouri and withdrew from both by December 2025, and laid off about 20% of its roughly 500 employees in March 2026 during the transition. "We went from a focus on a state-by-state framework to a national prediction markets platform with seamless offerings across the country," Levine said at the time. "It's simply a different operation, and the changes we made are a part of that transition." In hindsight the pullback reads as the standard rightsizing of a company preparing an exit.

What the share reaction says

IG's 14% single-day drop is the part operators should weigh. The fall came on the same Friday New York sued Kalshi for an estimated $36 billion as an illegal gambling operation, and separating deal scepticism from category risk is not possible from the price alone. What the two events together price in is that a buyer paying $1.3 billion plus an $850 million incentive pool for a US prediction market is buying an asset whose legal foundation is being contested in multiple states and whose product set the NFL is asking the CFTC to restrict.

For affiliates, the deal confirms the direction of the money. Two of the largest DFS-native brands, PrizePicks and Underdog, have now sold to European gaming and trading groups for a combined $2.8 billion, and both are being scaled as national event-contract platforms rather than state-licensed sportsbooks. That removes the state-by-state licensing friction affiliates had to navigate and replaces it with a single federal question that has not been answered. Levine framed the record plainly: "We've proven we can build the best products no matter how the regulatory landscape shifts."