The fight over whether sports prediction markets are really sportsbooks in disguise has a new front, and an unusually old legal weapon. On July 29, a Charleston attorney named James Hughes filed suit in Charleston County court against DraftKings, Polymarket, and more than a dozen other defendants, arguing that their sports event contracts amount to illegal sports betting in South Carolina, where wagering is banned outside the state lottery. The details here come from reporting by The Post and Courier, Courthouse News, and Bloomberg Law.
The mechanism is what makes the case notable. Hughes is suing under South Carolina statute 32-1-10, a descendant of the colonial-era Statute of Anne, which lets any resident recover gambling losses over $50 from illegal bets made in the previous three months, plus damages, when the losers themselves do not sue. In other words, a centuries-old anti-gambling law is being pointed at a very modern product. Hughes is seeking triple the losses wagered in the state, split between himself and the affected counties, along with an accounting of all South Carolina wagers by county, quarterly reporting until the platforms stop, an injunction to halt their operations, and attorney's fees. The complaint was filed by the firm Motley Rice.
What is actually being targeted
A precise distinction matters here. The suit is not aimed at DraftKings' sportsbook, which is legal in the states where it is licensed. It targets DraftKings Predictions, the company's event-contract product, alongside Polymarket and a chain of related exchanges, clearinghouses and market makers named as co-defendants, reportedly including Crypto.com and the CME. The complaint argues these "yes or no" contracts function exactly like bets: on which team wins, whether a player clears a scoring line, even which color of Gatorade gets dumped at the Super Bowl. Dressing a wager as a financial contract, the argument goes, does not stop it from being a wager under South Carolina law.
The companies see it differently. Polymarket has said prediction markets are governed by federal law and that state lawsuits run counter to the framework overseen by the Commodity Futures Trading Commission. DraftKings did not immediately comment. That is the core of the dispute in one exchange: the plaintiff says this is state-regulated gambling, and the platforms say it is a federally regulated financial product beyond a state's reach.
Part of a much bigger fight
This single case sits inside a national standoff we have been tracking. At least 14 states have filed similar suits, and at the end of July a coalition of 44 state attorneys general, led by Ohio's Andy Wilson, told the CFTC it lacks the authority to regulate sports event contracts and urged it to leave sports wagering to the states. The CFTC, for its part, has sued nine states to defend what it considers its exclusive jurisdiction. The same question runs through all of it, the one a House subcommittee wrestled with last week: is a contract on a ballgame a bet or a swap?
Our take
The colonial-law hook makes for a great headline, but the real significance is the venue. Most of the prediction-market fight has played out in front of Congress and the CFTC, at the federal level, where the platforms are strongest. This suit drags the question into state court under state gambling law, which is exactly the terrain the platforms want to avoid and where the 44 attorneys general are trying to keep it. If a court agrees that an event contract is a bet under South Carolina law, that reasoning travels to every other state with a similar statute, and there are many.
For bettors, two practical notes. First, the distinction the suit draws is the one to keep straight: this is about prediction-market event contracts, not licensed sportsbooks, and South Carolina has neither legal. Second, nothing here is decided; it is one plaintiff's complaint, and the companies have a serious federal-preemption argument that has not yet been tested to conclusion. The outcome, here or in one of the parallel cases, is what will actually determine whether Kalshi- and Polymarket-style sports trading survives in states that ban betting. We will update as the case, and the wider fight, develops.