IG Group Holdings (LSE:IGG) has agreed to acquire Underdog Sports Holdings, a US daily fantasy sports and prediction markets operator, for total consideration of up to approximately $1.3 billion.
The trading and investing platform provider said the deal comprises upfront consideration based on an enterprise value of approximately $1.1 billion, equivalent to 2.4 times Underdog's net revenue for the 12 months to June, plus an earnout of up to $200 million tied to 2026 net gaming revenue targets.
IG will fund the upfront equity value of approximately $963 million through 24.1 million new shares, representing approximately 6.8% of its enlarged share capital, alongside a cash payment of approximately $380 million.
Underdog generated net revenue of approximately $466 million in the year to 30 June, up 21% year-on-year, and $46 million of EBITDA in the latest quarter.
Separately, eligible Underdog employees can participate in a management incentive plan capped at $850 million, self-funded from earnings and requiring Underdog to hit EBITDA of at least $400 million in 2028 and $700 million in 2029.
"The acquisition of Underdog establishes IG as a leader in US prediction markets, one of the most significant opportunities across trading and entertainment", said chief executive Breon Corcoran.
The deal is expected to be broadly neutral to adjusted earnings per share in year one and double-digit accretive by year three.
IG has paused share buybacks from today's half-year results, with pro forma gross leverage expected under 2.0x at end-2026.
Underdog will operate as a standalone brand under its own management, with the acquisition expected to complete in late 2026 or early 2027, subject to US regulatory approvals including under the Hart-Scott-Rodino Act.
News Intelligence what this means for the company
IG Group is acquiring Underdog Sports for up to $1.3 billion—an upfront enterprise value of $1.1 billion (2.4x Underdog's $466 million annual net revenue) plus a $200 million earnout. The deal funds via 24.1 million new shares (6.8% dilution) and $380 million cash, and IG has paused share buybacks to manage leverage. IG expects the deal to be earnings-neutral in year one and double-digit accretive by year three, positioning itself in US prediction markets—a sector IG's CEO calls "one of the most significant opportunities."
The acquisition materially reshapes IG's growth profile toward US prediction markets, a high-growth segment (Underdog grew net revenue 21% year-on-year), but introduces near-term dilution and execution risk: completion is contingent on US regulatory approval and not expected until late 2026 or early 2027. The earnout structure ties $200 million to 2026 net gaming revenue targets, creating upside optionality if Underdog sustains growth momentum.
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