Lawsuit Against DraftKings Predictions and Polymarket Filed In South Carolina

The headline is accurate, there’s a brand-new lawsuit against the top prediction market platforms in South Carolina. To no surprise, it argues the sites are violating South Carolina’s sports betting laws.

But here’s the part that is surprising: the lawsuit didn’t come from the state. Sports betting is illegal, and the attorney general certainly has grounds for a lawsuit — as other state AG’s have done.

But no, this lawsuit is coming from an ordinary citizen (who’s also a lawyer) inside the state. It’s an interesting story, and you need to get a load of all the details. Keep on reading, and we’ll explain all about it!

Hughes Says Prediction Markets Are Just Sportsbooks In Disguise

The lawsuit comes form attorney James M. Hughes, who filed it in late July in Charleston County. Long story short, Hughes is making the same argument everyone else that’s filed a lawsuit against these sites already has: prediction markets can dress themselves up with all the fancy financial terminology they want, but a sports bet is still a sports bet. And as mentioned earlier, state law bars betting on sports.

His lawsuit targets Polymarket, DraftKings Predictions, and a few other prediction market platforms. For whatever reason, Kalshi is not in the lawsuit, despite them being the leaders of the industry. Weird, we know!

“The rhetorical set dressing of ‘prediction markets’ and ‘event contracts’ doesn’t change reality,” Hughes wrote in the complaint. “And reality is quite simple. Defendants incite, offer, and collect winnings from illegal wagers placed by South Carolinians on the outcome of sporting events.”

It’s notable that Hughes isn’t trying to get South Carolina Attorney General Alan Wilson to do something. Instead, he’s using an old state law that allows an ordinary person to sue over illegal gambling losses.

And when we say old, we mean this thing is ancient. South Carolina statute 32-1-10 traces back to the colonial era and allows someone to recover losses of more than $50 from illegal bets made during the previous three months, plus damages. Any money recovered would then be split between the plaintiff and the counties where those wagers were placed.

Hughes is nothing if not ambitious because he also brought the issue of problem gambling into the fold. He argues these pseudo-sports betting apps are contributing to increased gambling among young adults and cites data showing nearly 60 percent of people between 18 and 22 gamble on sports annually.

“But problem gambling is just one of the harms caused by defendants’ illegal conduct,” Hughes wrote. “Even bettors who do not struggle with problem gambling face serious financial ramifications from placing bets in a system that is fundamentally rigged against them.”

So yeah, Hughes isn’t asking South Carolina to politely clarify whether prediction markets count as gambling. His argument is more point-blank: they already ARE gambling, they’re illegal under state law, and South Carolinians should be able to claw some of that money back. Checkmate!

This Isn’t South Carolina’s First Prediction Market Lawsuit

Get this, Hughes isn’t the first person to try this strategy inside South Carolina. No, no, there was a similar case last summer, too.

South Carolina Gambling Recovery sued Kalshi and Robinhood back in June 2025, also arguing their sports contracts violated state gambling laws. That case eventually got kicked up to federal court and has since been paused while judges elsewhere decide some of the exact same issues.

It begs the question: how will the lawsuits from Hughes and South Carolina Gambling Recovery fare? It’s a bit of a mixed bag around the country.

Most notably, Kalshi scored a big ‘W in New Jersey when a federal appeals court blocked the state from enforcing its gambling laws against federally regulated contracts. But that same month, another federal appeals court refused to give Kalshi similar protection against Ohio, so there’s some glimmer of hope.

Courts around the country are coming to different conclusions about whether state gambling laws can touch prediction markets or not. All this is doing is creating even more confusion, and South Carolina’s two lawsuits will likely only muddy the waters more.

Could Prediction Markets Actually Push South Carolina To Legalize?

No matter who wins these lawsuits, here’s a hypothetical worth watching going into 2027: what if all this prediction market mumbo jumbo actually makes South Carolina more likely to legalize sports betting?

Think about it. “Traditional” sportsbooks like FanDuel and DraftKings can’t legally take wagers in South Carolina. Yet residents can access sports contracts through those same companies’ prediction market counterparts. How’s that make sense, right?

But that irony could eventually give legalization supporters one heck of a pitch to lawmakers. If South Carolinians are already wagering on sports anyway, why keep a regulated sportsbook market illegal while the state collects none of the tax money from it?

To be clear, Hughes’ lawsuit doesn’t mean South Carolina is suddenly preparing a 2027 sports betting bill. But prediction markets are forcing lawmakers across the country to confront a reality they could mostly ignore a few years ago: saying “sports betting is illegal here” doesn’t mean people can’t actually do the damn thing.

Again, it’s just a hypothetical (for now), but a very real one at that. Other states are weighing the same thing, so why not South Carolina?