IG Group announced the acquisition of Underdog Sports Holdings for $1.1bn upfront, with contingent payments of up to $200m to shareholders and management incentives reaching $850m tied to EBITDA targets. The deal is expected to close in late 2026 or early 2027.
The deal values Underdog at 2.4x trailing twelve-month revenue, or 2.8x including the earn-out. That is below the $2.5bn Allwyn paid for PrizePicks at 2.9x revenue. The maximum management payout is tied to $700m EBITDA in 2029, against a current run rate of around $115m. Ben Robinson of Corfai notes the structure defers the most expensive part of the valuation: 'Prove it first.'
Underdog generated $466m revenue in the twelve months to June 2026, up 21% year-on-year. Prediction markets contributed 54% of handle in the first half of the year. The platform has five million depositing customers and eleven million registered accounts. But growth slowed to 11% in the first half of 2026, raising the question of whether prediction markets create new revenue or cannibalise DFS.
Regulatory risk remains central. State regulators, tribal operators and gambling lobbies dispute whether sports event contracts qualify as financial products rather than gambling. Ed Birkin of H2 Gambling Capital warns that if the market is shut down in a significant number of states, the valuation will look very different.
IG Group plans to use its balance sheet and risk management capability to internalise liquidity and launch contracts on crypto, finance and cultural events. IG chief executive Breon Corcoran personally invested in Underdog in 2021 and 2023, holding roughly 0.34% of the company. He previously acquired Underdog founder Jeremy Levine's earlier business, DRAFT, in 2017 while running Paddy Power Betfair. IG shares fell 20% on the announcement, and the £125m buyback programme is paused until 2027.
