Betting or Trading? Prediction Markets' $1.1bn Week Ends in Court

In the space of a single week, prediction markets — platforms where you “trade” contracts on whether real-world events will happen — attracted a billion-dollar acquisition from a FTSE 100 company and a lawsuit from the State of New York calling the whole model illegal gambling. Both things are true at once, and that contradiction is the story.

The deal: a trading giant buys into sports predictions

Per iGaming Business and SBC News, London-listed trading platform IG Group has agreed to acquire Underdog — the US daily-fantasy-sports operator that moved into sports prediction markets in September 2025 — in a deal valuing the company at $1.1 billion, rising to as much as $1.3 billion if Underdog hits its 2026 revenue and profitability targets. That price is about 2.4 times Underdog’s $466 million revenue for the twelve months to June 2026, and iGB reports IG has lined up a bridge facility of up to $950 million with Barclays and Goldman Sachs to fund it, with completion expected in late 2026 or early 2027.

The names involved tell you how seriously the gambling industry proper is taking this. IG’s chief executive is Breon Corcoran — previously the boss of Paddy Power Betfair, one of the biggest betting companies in the world — and iGB notes he has history with Underdog’s founder Jeremy Levine, having bought Levine’s previous fantasy-sports app for Paddy Power back in 2017. Levine’s own framing, per iGB: “the future of prediction markets is going to be about sports.” IG says the acquisition would more than double its US revenues and grow its US customer base more than tenfold.

The lawsuit: New York says this is just gambling

The very same week, the Guardian reports, New York’s governor and attorney general sued Kalshi — the sector’s most prominent platform — alleging it runs an illegal, unlicensed gambling operation. The state’s argument is blunt: users are staking money on uncertain events they cannot control, which is the legal definition of a bet; Kalshi holds no licence from the state gaming commission; it avoids the taxes licensed sportsbooks pay; and, the suit alleges, it accepts customers aged 18 to 20 in a state where mobile sports betting requires you to be 21. The suit seeks forfeited profits, restitution and fines of up to three times profits.

Kalshi’s response, per the same report: it is a federally regulated exchange under the Commodity Futures Trading Commission, states cannot simply shut it down, and pushing it out would only drive New Yorkers offshore. That is the entire fight in miniature — the platforms say “we are a financial market, like stocks”, the state says “you take bets, so you are a bookmaker”, and the courts now get to decide which sentence wins.

Why this matters to players — including here

This is not just an American argument. The Guardian reported back in May that US prediction platforms were already offering markets on Australian elections — one of the markets this site covers — and the products are accessible far beyond the states arguing about them. So the practical question for a reader is what protections travel with your money, and the honest answer today is: fewer than with a licensed bookmaker. The New York suit itself catalogues the gap — different age floors, no gaming-commission oversight, no contribution to the problem-gambling funding that licence fees pay for. The platforms dispute the framing, not the mechanics.

Our position is the same one we apply to every operator on this site: the label matters less than the licence. Whether a product calls itself a sportsbook, an exchange or a prediction market, the questions that protect you are identical — who regulates it, what age and identity checks it runs, where disputes go, and what happens to your balance if the law moves against it mid-trade. A billion-dollar acquisition says smart money expects this sector to grow; a state lawsuit says the rules it will grow under are genuinely unsettled. Both can be true, and until the second one resolves, treat prediction markets as what they are right now: a fast-growing product with an unfinished rulebook.

We will update this piece as the New York case and the IG deal progress, and correct anything that moves.