IG Group (LON: IGG) has entered the prediction markets. The Underdog deal did not come out of the blue. The broker’s CEO, Breon Corcoran, already revealed on the last earnings call that it was actively looking into prediction markets. But apart from the $1.3 billion headline of the Underdog buyout, IG mentioned the real purpose of the deal: to “create a coherent customer funnel” for its “next growth phase”.
The final payout might go way higher. IG agreed to pay $1.1 billion upfront, with a $200 million earnout payable to Underdog shareholders. It will also pay a maximum of $850 million to "eligible Underdog employees" if the platform's EBTIDA hits $400 million in 2028 and $700 million in 2028.
IG Wants to Be Big in the US
The prediction market deal is also a gateway to expand IG’s presence in the US, where it entered in 2021 with the $1 billion tastytrade acquisition. The broker now expects to more than double its US revenue and increase its US monthly active customers more than tenfold.
Read more: IG Makes Prediction Markets a Growth Priority With $1.3 Billion Underdog Deal
In the first six months of 2025, the broker generated £103.4 million in revenue from its US-centric businesses, an annual increase of 18 per cent. The number of its active customers in the country also jumped by 11 per cent to about 104,500, while 21,100 made their first trades.
If the prediction market bet pays off, those US figures would rise significantly.
For context, IG has 1.4 million customers globally, with about 843,600 active ones. Underdog, meanwhile, has more than 11 million registered accounts, with over 5 million depositing customers and an average of about 1 million monthly active users.
IG, however, sees event contracts as binary options; its CEO made that clear earlier. “Many of you will know that prediction markets are just a different title for what used to be binaries in Europe,” Corcoran said earlier, “or indeed what used to be products on betting exchanges in Europe as well.”
After ESMA’s clarification on the classification of event contracts as binary options, gambling products, or products under crypto regulations, it is likely that IG will keep its prediction markets business outside the bloc.
- More Than Jersey: What IG Group’s Offshore Move Really Means
- IG Group Proposes Jersey Holding Company as Half-Year Revenue Rises 18%
- IG Employee No. 122 Jody Dunn to Leave COO Role, Ending 24-Year Tenure
Will More CFD Brokers Enter Prediction Markets?
Meanwhile, IG is not the first CFD broker to see the potential of prediction markets. Plus500, which earlier followed IG’s US expansion playbook, this time beat its London-listed competitor by becoming a clearing agent in the space and then offering event contracts directly.
While Plus500 has partnered with the prominent Kalshi, IG has gone with a less well-known name in the space.
Underdog started as a fantasy sports company but moved into sports betting in early 2024, only to shut down its sportsbook in late 2025. At the same time, it entered the prediction markets in September 2025.
The platform generated net revenue of about $466 million in the 12 months ended 30 June 2026, up 21 per cent. In the last three months of that period, revenue came in at about $122 million, with EBITDA of approximately $46 million.
The $1.3 billion price tag is equivalent to 2.4x Underdog's LTM June 2026 net revenue.
Sports Fans to Day Traders?
Although Underdog’s user base is mostly sports fans, IG appears to intend to convert them into users of other markets. “The Board believes leadership in sport provides a strong platform to consider moving into non-sports contracts, with the same regulated infrastructure able to support contracts referencing crypto, financial and macroeconomic, and cultural and political outcomes, opening a materially larger addressable market,” the announcement noted.
On a pro forma basis, combining Underdog's audited 2025 results with IG's audited 2025 results, the US would have accounted for approximately 40 per cent of Group revenue, up from 22 per cent on a standalone basis.
Prediction markets and fantasy sports would have made up approximately 25 per cent of the combined total net trading revenue, reducing the Group's reliance on any single product line.
IG, however, expects the result of the acquisition to be neutral to adjusted earnings in the first year, with double-digit percentage accretion by year three. The broker also expects the prediction markets platform to deliver a return on invested capital in excess of IG's weighted average cost of capital in year three, in line with its capital allocation framework.
