IG Bets $1.3bn on Prediction Markets — Why the Underdog Deal Skips EU Retail Traders

IG Group, the FTSE 250 broker founded in 1974, has agreed to acquire Underdog, a US prediction-markets operator, for a headline $1.3bn. The structure is $1.1bn upfront plus a $200m earnout to Underdog's shareholders, with up to a further $850m payable to eligible employees if the business reaches EBITDA of $400m in 2028 and $700m in 2029 — pushing the potential total beyond $2bn. On IG's own numbers the headline figure is roughly 2.4 times Underdog's net revenue of about $466m for the twelve months to 30 June 2026, a period in which that revenue grew 21%.

Underdog is an unusual target. It began life as a fantasy-sports company, launched a sportsbook in early 2024, closed it in late 2025, and pivoted into prediction markets in September 2025. What it brings to IG is an audience: more than 11 million registered accounts, over 5 million of them funded, and around 1 million monthly active users. IG's chief executive, Breon Corcoran, has been explicit that the reach, not the product, is the point — the goal is to “create a coherent customer funnel” that moves sports-and-events users into trading crypto, financial and macroeconomic markets. Set against IG's roughly 843,600 active clients, Underdog would more than double the group's active user base overnight.

The single most useful line in the whole announcement, for a European audience, came from Corcoran himself: prediction markets are “just a different title for what used to be binaries in Europe, or indeed what used to be products on betting exchanges”. That is not a throwaway comparison. A prediction market pays a fixed sum on a yes/no outcome — will an index close above a level, will a rate decision land a certain way — which is the textbook definition of a binary option. ESMA banned binary options for EU/EEA retail clients under its 2018 product-intervention powers, and national regulators made the ban permanent. Event contracts fall on the wrong side of that line.

That is why IG is building this in the United States, where the CFTC regulates event contracts and IG already has a foothold through its $1bn 2021 acquisition of tastytrade. The scale of the pivot is striking: on a pro-forma basis the US would jump to roughly 40% of group revenue, from 22%, with prediction markets and fantasy sports making up about a quarter of combined trading revenue. Rival Plus500 has moved the same way, partnering with Kalshi. The centre of gravity for this product is American, and the regulatory reason it stays there is precisely the protection framework EU retail traders sit inside.

None of this weakens IG's EU proposition — but nor does it add to it. European retail clients are served by IG Europe GmbH, authorised by BaFin, and that entity keeps doing exactly what it did before: forex and CFDs under ESMA leverage caps, negative-balance protection and Investor Compensation Fund cover. The analyst scepticism captured in the original reporting — that an events crowd may not convert into leveraged traders as cleanly as the funnel thesis assumes — is a shareholder question, not a client one. For EU traders the practical read is simpler: a broker you may already use is spending heavily on a market you cannot legally be sold.

If you trade with IG from the EU, there is nothing to action and nothing to fear: your account, leverage limits and protections are untouched by a US acquisition. If you are tempted by prediction markets after seeing the headlines, understand what the fixed-payout structure actually is — a binary bet that EU regulators judged unsuitable for retail — and be wary of any offshore platform offering it to European residents, because operating outside ESMA's perimeter means operating outside its safeguards. The regulated way to take a directional view on a market event in the EU remains a CFD with a defined stop, not an all-or-nothing contract.

IG itself remains one of the more complete EU-regulated brokers we cover: a BaFin entity, a half-century track record, and one of the widest instrument ranges in the market. If IG's corporate ambition is what drew your eye, judge the broker on its regulated CFD and forex offering rather than on a US product you will not be able to open — and read the full review before committing capital.