A Two-Step Entry Into UK Prediction Markets
IG Group has formally applied for a UK gambling licence that would allow it to offer prediction markets covering political events, entertainment outcomes and sports results, the company announced on Thursday. The firm plans to make these products available to the broader public in early 2027, following a first phase in which contracts tied to financial events will be offered exclusively to UK professional clients during the fourth quarter of this year.
The application is lodged under IG View Limited, a London-based subsidiary that appears on the Gambling Commission's public register under the trading name "ig prediction markets." The register currently lists a single pending activity: a remote general betting licence for real-world events. No licence has been granted at this stage.
The split timeline reflects the way UK regulation partitions the product. The Financial Conduct Authority classifies contracts on purely financial outcomes as binary options, a category it has prohibited for retail investors since 2019. By contrast, wagers centred on sports fixtures or political results fall under the Gambling Commission's remit. For traders, this means the same underlying event could be traded through two different regulatory channels, depending on how the contract is structured.
Riding a Rapidly Expanding US Market
The strategic rationale is clear from the numbers in the US. Taker volume across Kalshi and Polymarket climbed to $172.4 billion in the third quarter, a substantial jump from $98.5 billion in the second quarter, according to calculations by FM Intelligence. That near-doubling in a single quarter underscores the momentum behind event-based trading.
IG is not entering the US space organically. In July, the company agreed to acquire Underdog, a US-based fantasy sports and prediction-markets operator, in a deal valued at up to roughly $1.3 billion. The transaction is expected to close in late 2026 or early 2027, which would give IG an established US footprint before it scales its UK prediction-markets offering.
"Trading, investing and entertainment are converging," Chief Executive Breon Corcoran said in the company statement. Corcoran's background is directly relevant: he previously served as chief executive of Betfair and led Paddy Power Betfair until January 2018, giving him deep experience in both the betting and trading worlds.
A Comeback to the Gambling Register
For IG, the application marks a return to a sector it exited more than a decade ago. In 2011, the company sold the customer base of its Extrabet betting arm to Spreadex, effectively exiting UK retail wagering. Spreadex, which offers both sports betting and financial spread betting, holds the same category of general betting licence that IG is now requesting. Sporting Index sits in a similar position.
Other established players—Betfair, Smarkets and Matchbook—hold betting intermediary licences, a category the Gambling Commission indicated in February would appear to encompass prediction markets. Notably, neither Kalshi nor Polymarket appears on the UK register, and neither do IG's listed UK rivals CMC Markets and Plus500.
Across the wider European Union, no prediction market currently holds a licence, although Gibraltar granted its first such authorisation in April. For brokers and traders operating in the EU, this means a largely unregulated landscape that could shift rapidly as more jurisdictions follow Gibraltar's lead.
Freetrade Revenue Slips Sharply; IG Margines Under Pressure
The same corporate statement disclosed a significant revenue decline at Freetrade, the UK investing app that IG agreed to purchase for £160 million. Net trading revenue at Freetrade fell 67 per cent year-on-year to £2.2 million in the third quarter, down from £6.7 million in the same period a year earlier. Monthly active customers edged down one per cent to 454,700.
On a per-customer basis, revenue worked out to roughly £4.84 for the quarter, compared with £14.57 a year prior, based on Finance Magnates' own calculation. IG attributed the softer stock-trading revenue to a combination of weaker market conditions, investor wariness over technology and AI valuations, and caution ahead of possible capital gains tax changes in the upcoming UK Budget.
Freetrade reported a pre-tax loss of £24.4 million for 2025, its first full year under IG ownership.
On the flip side, IG's own investing customer base in the UK and Ireland grew 30 per cent year-on-year to 78,100. The company also confirmed that its unified app—covering trading, investing and crypto, and having absorbed its former standalone trading app—is now live in the UK, with roll-out to other markets to follow.
Financials, Forecast and Structural Changes Ahead
IG's total revenue for the third quarter declined 14 per cent year-on-year to £240.5 million, in line with the guidance the company issued on October 2. Income from client fees and commissions on over-the-counter derivatives—including contracts for difference and spread bets—rose approximately eight per cent on an annual basis. However, net revenue derived from those products fell 18 per cent to £156.1 million.
The gap between gross and net figures is explained by the return-to-volume ratio, the share of trading income that ultimately converts into net revenue. That ratio slipped to 70 per cent, down from an average of around 80 per cent since the second half of 2025. IG said it expects the figure to be structurally higher over time, implying that the current compression is partly cyclical rather than permanent.
The company maintained its 2026 outlook of mid-single-digit revenue growth and indicated that share buybacks are set to resume in 2027. Separately, IG's planned relocation of its holding company to Jersey is expected to take effect in late 2026 or early 2027—a move that will have tax and regulatory implications for shareholders and, indirectly, for the cost structure passed on to retail and professional clients.
