IG Group has announced its largest-ever acquisition, agreeing to purchase US prediction markets operator Underdog for up to approximately 1.3 billion dollars. The transaction represents a fundamental strategic shift for the UK-based broker, elevating prediction markets from a supplementary offering to a core growth driver. Completion is anticipated in late 2026 or early 2027 pending regulatory clearance.
The deal structure includes upfront consideration of roughly 1.1 billion dollars based on enterprise value, plus a performance-linked earnout worth up to 200 million dollars. IG will settle the initial payment through approximately 24 million newly issued shares and 380 million dollars in cash, funded partly through a 950 million dollar bridge facility. Additionally, Underdog staff could receive up to 850 million dollars through an incentive programme tied to achieving substantial EBITDA targets in 2028 and 2029.
The strategic value extends beyond revenue growth. IG will acquire a vertically integrated US licensing framework encompassing futures commission merchant, designated contract market, and derivatives clearing organisation authorities. This infrastructure supports not only prediction markets but potential expansion into crypto-referenced contracts, financial derivatives, and broader event-based products. The acquisition is expected to more than double IG’s US revenue and increase American monthly active users more than tenfold.
FXnCO Insight
This transaction signals that major brokers now view prediction markets as sufficiently mature and scalable to justify billion-dollar commitments, fundamentally reshaping competitive dynamics in retail derivatives and potentially accelerating regulatory scrutiny of event-based contract offerings globally.
Source: Finance Magnates