Aristotle sues Underdog over IG Group deal terms

Underdog is facing a lawsuit in Delaware Chancery from Aristotle International and its subsidiary Aristotle Exchange Holding Company. The dispute surfaced while Underdog’s planned sale to IG Group, valued at up to $1.3 billion, remained pending regulatory approval.

According to Sportico, Underdog chief executive Jeremy Levine said on Thursday that the company was being sued in the Delaware Court of Chancery. Aristotle declined comment but confirmed that the lawsuit had been filed, and the court had not yet published the full case file.

In a post on X, Levine wrote, “First time being sued,” and said Aristotle’s claims include fraud, scheme and conspiracy. He also said Aristotle’s team was unhappy with the money it was making from the sale of its licenses, told him “give us some more or we won’t sign,” and tried to hold up the deal to get more for themselves. Levine added that Aristotle would end up making more than anyone else in the sale to IG.

The transaction behind the dispute is a larger sale that Sportico detailed. Under that agreement, IG Group will pay at least $1.1 billion and as much as $1.3 billion in stock and cash if performance targets are met. The deal also includes a management incentive plan that could pay eligible Underdog employees up to $850 million, and IG Group is expected to repay about $160 million of existing debt.

A source familiar with Underdog’s view said Aristotle received Underdog equity as part of the exchange-and-clearinghouse deal, and that Aristotle now wants a better return from the IG takeover than it is getting. IG Group has said Underdog’s push into prediction markets, including launching its own exchange, was a key attraction.

Underdog bought Aristotle Exchange in March as it shifted away from routing bets through third-party exchanges and toward processing most, if not all, wagers itself. CFTC filings from Aristotle Exchange DCO, Inc. described the clearinghouse as intending to clear fully collateralized binary option contracts listed on an Aristotle-affiliated designated contract market, and said it expected to begin clearing once both the DCM and DCO were registered and the contracts were listed.