Underdog Sports recently completed a significant transaction, selling to IG Group for a staggering $1.3 billion. The sale reflects the strategic timing and adaptability that have been crucial in the realm of mergers and acquisitions.
Launched in 2020, Underdog initially focused on daily fantasy sports with a particular emphasis on pick'em and best ball formats. However, the company made a sharp pivot to prediction markets late last year, capitalizing on their surge in popularity. This swift adaptation enabled Underdog to achieve a valuation that seemed highly ambitious just two years prior.
"Prediction markets are one of the most exciting developments we’ve seen in a long time," said Underdog founder and CEO Jeremy Levine in September 2025. "While still new and evolving, one thing is clear – the future of prediction markets is going to be about sports – and no one does sports better than Underdog."
IG Group, a fintech firm based in England, intends to expand Underdog’s platform beyond just sports to encompass financial markets, cultural topics, and political events, as mentioned by CEO Breon Corcoran during a Thursday webinar announcing the acquisition. "If sport is where Underdog has won, it’s not where the opportunity ends," Corcoran stated, noting that the underlying infrastructure is adaptable across various categories.
The companies anticipate finalizing the deal either in late 2026 or early 2027.
In terms of structure, IG Group will execute the purchase by issuing over 24 million new shares, which will contribute around 60% of the initial equity payment, equating to approximately 6.8% of its total enlarged share capital. Following the announcement, IG Group's market valuation took a hit, with shares dropping more than 14%, closing at 1460 GBX (or $19.62 USD).
Both Levine and co-founder Brandon Stakenborg will hold 1.5% of IG Group's total stock, subject to a vesting period and a two-year lockup agreement. At current prices, this stake could translate to over $105 million.
In a statement regarding the acquisition, Levine remarked, "… we’ve proven we can build the best products no matter how the regulatory landscape shifts. We’ve gained significant traction in prediction markets since our launch last year. Now, with our own exchange and by joining IG, we’re going to take an incredible leap in what we can offer customers and make Underdog the place to make predictions on sports and beyond."
Underdog reported a net revenue of approximately $466 million for the fiscal year ending June 2026, which marks a 21% increase from the $380 million recorded in the previous year. Despite the acquisition, Underdog will operate as a standalone company with its own management team — a similar arrangement to the acquisition of its rival, PrizePicks, by Allwyn for $1.5 billion in September 2025.
Additionally, the deal includes a $450 million bridge facility designed to cover various costs: around $380 million for the initial shareholder payout, up to $200 million contingent earnout based on revenue benchmarks, and $160 million designated for Debt repayment upon closure of the transaction. To further incentivize Underdog employees, IG Group plans to establish a management incentive program (MIP) worth as much as $850 million by 2029, with expectations that Underdog’s earnings will primarily fund it, although IG reserves the right to issue more stock if necessary.
Underdog's journey from a daily fantasy sports platform to a full-fledged prediction market operator involved navigating various regulatory challenges. Between negotiating with state legislators and managing disputes regarding the legality of its DFS products, the company faced considerable hurdles. The so-called "DFS 2.0" operators, including Underdog and PrizePicks, often encountered cease-and-desist orders, ultimately prompting them to alter their offerings in multiple states after the Super Bowl in 2024.
Cesar Fernandez of FanDuel remarked at the National Council of Legislators from Gaming States (NCLGS) in summer 2023, "There are companies today posing as fantasy-sports operators, and they are running illegal sportsbooks."
Despite previously selling two companies to major players like DraftKings and FanDuel, Levine has openly challenged them over market dynamics, suggesting their apprehensions about the growing competition. He stated in an open letter to customers, "They’ve seen our company, and others, produce superior products, more exciting user experiences, and begin to challenge them for sports fans’ attention – and they’re scared that we will challenge their market positions."
Although Underdog initially pursued entry into regulated online sports betting in states like North Carolina and Missouri, it retracted those ambitions in December 2025. This shift aligned with broader trends among companies seeking strategic exits as the business landscape evolved. Levine confirmed this transition: "We went from a focus on a state-by-state framework to a national prediction markets platform with seamless offerings across the country. It’s simply a different operation."
The turning point came in late 2024 when the return of President Donald Trump, who advocated for financial deregulation, changed the regulatory environment favorably for prediction markets. The Commodity Futures Trading Commission (CFTC) shifted to support prediction markets, thereby enhancing opportunities for operators like Kalshi and Polymarket, while providing a significant boost to Underdog and PrizePicks, who had the infrastructure ready to scale immediately.
Following this regulatory opening, Underdog successfully raised $70 million in a Series C funding round led by Spark Capital in March 2025, which valued the company at $1.2 billion. Just three years prior, its Series B round placed a valuation at $485 million.
Underdog capitalized on this momentum with rapid accreditations and acquisitions, taking advantage of a more lenient CFTC approval process compared to state-level gaming regulations. Key milestones included partnerships and regulatory approvals from September 2025 through July 2026, facilitating its transition to a prediction market-focused business model.
In closing, Corcoran recognized Underdog's competitive edge in the prediction market sector by stating, "Underdog has a clear right to win. It is built for sports, with a large sports-first customer base used to fast, real-time risk taking. The wallets, the KYC, the brand are already in place, so moving into prediction markets is close to friction-free."
The future trajectory of prediction markets in the U.S. will largely depend on regulatory shifts influenced by political dynamics, particularly as they relate to the CFTC. Corcoran acknowledged the challenges ahead, saying, "We’re clear-eyed about the risks, including the fast-moving regulatory environment."
