IG Group's chief executive questioned the volume figures promoted by Kalshi and Polymarket, saying their economic value is hard to establish. Breon Corcoran spoke on Thursday at a seminar on Underdog, the US prediction markets operator IG is buying for up to $1.3 billion.
Notional volume is the headline figure in prediction markets. Kalshi crossed $100 billion in lifetime notional volume in June, helped by World Cup markets. Corcoran told analysts that investors should judge the sector on net gaming revenue instead.
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A $1 Parlay With a Notional Value in the Thousands
Both Kalshi and Polymarket are private. Kalshi raised $1 billion at a $22 billion valuation in May.
Corcoran said the two were "talking up their notional traded volume with great gusto."
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He gave the example of a 100-leg parlay, where a $1 stake can carry a notional value in the thousands or even tens of thousands of dollars. Handle, the money customers actually stake, is closer to the terminology listed companies use, he said. The key metric is net gaming revenue.
Corcoran said IG was currently the only public company talking about prediction markets revenue, while noting that Robinhood had done so in the past. Robinhood earned $156 million from event contracts in the second quarter, more than ten times the year-earlier figure.
Underdog Reports $105 Million Quarter
Underdog generated net revenue of $105 million in the third quarter, up 118% from a year earlier, co-founder and Chief Executive Jeremy Levine told the seminar. Handle per customer rose 165% over the same period, he said.
Levine said the comparison was helped in part by World Cup matches in the quarter and by an unusually weak margin period a year earlier. Underdog's net revenue was $441 million in 2025, by Underdog's count.
IG agreed in July to pay $1.1 billion upfront for Underdog, plus an earn-out of up to $200 million tied to 2026 revenue. Chief Financial Officer Clifford Abrahams said the upfront price was 2.4 times Underdog's net revenue for the 12 months to June.
Deutsche Bank analyst David McCann asked whether lower margins on newer prediction products could weigh on quarterly revenue as the mix shifts. Levine said margins will not always rise while handle grows quickly.
"3X the handle at half the margin? Of course we do," he said.
Rivals Also Run Their Own Exchanges
Underdog launched its own exchange in July and holds the three federal registrations needed to broker, list and clear contracts. DraftKings filed its first event contract templates for its DKeX exchange in May.
Robinhood and trading firm Susquehanna bought derivatives exchange MIAXdx in January and renamed it Rothera, a step that gave Robinhood a licensed exchange and clearinghouse of its own.
For IG, the deal shifts the revenue base. Abrahams said prediction markets and daily fantasy sports would make up 27% of combined group revenue, and the US 41%, up from 19% now.
Corcoran described Underdog's customers as typically men aged 20 to 40 who, he said, IG knows also trade other asset classes.
He spoke a week after IG said third-quarter revenue fell about 14% from a year earlier, as retention on its over-the-counter business slipped to around 70% from an average of about 80% since mid-2025.
IG will present a strategy update for its existing business in London on October 22.
