IG Group’s acquisition of prediction market platform Underdog could ultimately cost over two billion dollars when all contingent payments are factored in. The deal includes an upfront payment of 1.1 billion dollars plus a two hundred million earnout, with an additional maximum of 850 million payable to Underdog employees if specific EBITDA targets are reached by 2029. IG’s leadership has framed the transaction not as an end in itself but as a customer acquisition funnel for future growth.
The acquisition represents a strategic push into the US market, where IG already operates through its 2021 tastytrade purchase. The company projects that Underdog will help more than double US revenues and increase monthly active users tenfold. Currently, IG serves roughly 104,500 active US customers from total global active users of 843,600, while Underdog brings over five million depositing customers and approximately one million monthly actives.
Regulatory classification remains a crucial consideration. IG’s CEO has explicitly compared prediction markets to binary options, which faced European restrictions following ESMA interventions. This positioning suggests IG will likely maintain its prediction markets operations outside EU jurisdictions to avoid binary options regulations, gambling frameworks, or crypto licensing requirements that could apply depending on product structure and jurisdiction.
The Underdog deal signals growing interest from established CFD brokers in US-focused prediction market platforms as alternative revenue channels and client acquisition strategies.
FXnCO Insight
Brokers eyeing prediction markets must carefully evaluate whether these products will be classified as derivatives, gambling, or crypto assets in their target jurisdictions before committing acquisition capital.
Source: Finance Magnates