Underdog has been sold to IG Group Holdings for $1.3 billion, it was announced Thursday.
IG Group, a global financial tech company, is headquartered in London and is an online trading provider. This move signals a big push for IG Group into both the U.S. market and prediction markets, in general.
“Technology is reshaping the large, high-engagement markets in which IG operates — and increasingly bringing them together,” Breon Corcoran, CEO of IG Group, said in the announcement. “Underdog puts us at the front of that convergence: a product-first team, a leading daily fantasy sports franchise, and a full license stack that together give us a differentiated position in U.S. prediction markets. It expands both our addressable market and our growth trajectory. We are delighted to welcome [CEO] Jeremy [Levine] and the Underdog team to IG.”
As for Underdog, which was founded in 2020 and introduced its prediction market in September of last year, it is clearly viewed as a deal worth making.
“We built Underdog by creating the best experience for fans, and we’ve proven we can build the best products no matter how the regulatory landscape shifts,” Underdog CEO and co-founder Levine said in the press release. “It’s why we’ve taken off in prediction markets since we launched 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. IG’s scale, expertise, resources, and reach are going to unlock our potential, expand what we’ve built, and bring our products to more audiences. I couldn’t be more excited about what we’re going to do together.”
Wither best ball?
The press release from IG Group is heavy on prediction market talk — noting Underdog has quickly become the “third-largest U.S. prediction markets venue by U.S. regulated notional volume flow” — but it doesn’t give short shrift to the other products in Underdog’s cabinet.
Except one.
There is no mention of best ball specifically, a fantasy sports format that Underdog was instrumental in popularizing over the last half-decade. Currently, Underdog’s signature best ball contest, Best Ball Mania, is offering a $2 million top prize.
It does mention draft and pick ‘em games, but cautions that while these games have been “the engine of Underdog’s growth,” state-by-state restrictions “cap both Underdog’s addressable market and breadth of product.”
Mo’ money
The $1.3 billion price tag could be a lot more, if Underdog hits certain targets.
For starters, the $1.3 billion will be partly paid out in IG stock, and there’s an earn-out of about $200 million that goes to Underdog’s shareholders if the company reaches particular targets.
There’s a separate pot, as well. Eligible Underdog employees will participate in a tiered management incentive plan (MIP) with a maximum potential payout of $850 million, “self-funded from Underdog’s earnings and conditional on strong outperformance.” To max it out, Underdog would have to post EBITDA of at least $400 million in 2028 and $700 million in 2029.
