IG Group agrees to buy Underdog for up to $1.3 billion

Why it matters

IG is paying for Underdog's federally regulated exchange and sports audience, betting that prediction markets can feed customers into trading products beyond sports.

Jeremy Levine (@JerLevine) and Brandon Stakenborg (@Stakenborg) agreed to sell Underdog to British trading platform IG Group for up to approximately $1.3 billion, according to terms announced on July 30th. The transaction would turn the five-year-old fantasy sports operator into IG's route into the US prediction-market business.

The headline price includes an upfront enterprise value of approximately $1.1 billion and an earnout of as much as $200 million for Underdog shareholders. The earnout depends on Underdog generating positive EBITDA in 2026 and reaching net gaming revenue between $533 million and $600 million. Reuters reported the agreement on Thursday.

IG expects to pay approximately $963 million in upfront equity value after accounting for Underdog's debt and cash. About 60% will be paid through 24.1 million new IG shares, with approximately $380 million paid in cash. IG also expects to repay approximately $160 million of Underdog debt.

A separate management incentive plan could pay eligible Underdog employees as much as $850 million. That amount is not part of the $1.3 billion purchase consideration and would require a sharp expansion in profit. The maximum payout requires Underdog to produce at least $400 million of EBITDA in 2028 and $700 million in 2029. IG said the plan would be funded from Underdog's earnings.

IG is buying a regulated customer funnel

Levine founded Underdog in 2020 after building two earlier daily fantasy sports companies. StarStreet was acquired by DraftKings, while DRAFT was acquired by Paddy Power Betfair, now part of Flutter Entertainment. Stakenborg, Underdog's co-founder and chief product officer, also worked on DRAFT.

That history connects the sellers directly to IG CEO Breon Corcoran. Corcoran led Paddy Power Betfair when it acquired DRAFT and later invested personally in Underdog. IG's announcement says Corcoran owns approximately 0.34% of Underdog on a fully diluted basis through preferred shares and options acquired before he became IG CEO in December 2023. Corcoran participated in the deal negotiations after disclosing the holding to IG's board, then recused himself from the board's formal approval.

IG's strategic case rests on moving Underdog's sports audience into a broader menu of event contracts, derivatives and investments. Underdog has more than 11 million registered accounts, approximately 5.5 million cumulative depositing customers and about 953,000 average monthly active users in the first half of 2026, according to unaudited figures supplied by management.

Underdog began offering prediction markets through third-party exchanges in September 2025. In March, it bought a Commodity Futures Trading Commission-registered exchange and clearing organization, then launched its own exchange on July 18th. That license stack lets Underdog operate the brokerage, exchange and clearing components of a trade rather than handing much of the transaction to outside providers.

IG says the acquisition would more than double its US revenue and increase its US monthly active customer count more than tenfold. IG plans to keep Underdog as a standalone brand under Levine, who would report to Corcoran. Levine and Stakenborg will receive IG shares representing approximately 1.5% of the enlarged company's share capital, subject to vesting and lockup provisions lasting as long as 24 months.

Underdog reached profitability before the sale

Underdog generated approximately $466 million in net revenue during the 12 months ended June 30th, up 21% from the comparable period, according to the management accounts published by IG. It produced $122 million in net revenue and approximately $46 million in EBITDA during the second quarter.

The quarterly profit follows years of losses. Underdog reported negative EBITDA of $55.5 million in 2023, $60.3 million in 2024 and $52.8 million in 2025. Its first-half 2026 EBITDA was $59.6 million. Those figures are unaudited, and IG's definition adds back amortization and share-based compensation.

The base purchase price is close to Underdog's last announced private-market valuation. In March 2025, Underdog announced a $70 million first close of a Series C led by Spark Capital at a $1.225 billion pre-money valuation. That equity valuation is not directly comparable with IG's $1.1 billion upfront enterprise value because the acquisition price accounts for debt, cash and other liabilities. The earnout gives shareholders a route above the prior valuation if Underdog meets its 2026 targets.

The transaction still requires US regulatory and antitrust clearance, confirmatory due diligence and definitive documentation. IG expects it to close in late 2026 or early 2027. The purchase also pushes IG to pause share buybacks and use a $450 million bridge facility from Barclays and Goldman Sachs to help fund the cash consideration and refinance Underdog's debt.