South Carolina Man Who Never Used Prediction Markets Sues Over Alleged Illegal Sports Betting

A South Carolina man who has never placed a prediction market trade is suing DraftKings and Polymarket, alleging their sports event contracts constitute illegal gambling under state law.

James M. Hughes, a resident of Charleston County, filed the complaint alleging that the prediction markets are offering illegal sports betting.

Polymarket and DraftKings Predictions operate in South Carolina as federally regulated financial trading exchanges, holding Designated Contract Market (DCM) licenses from the Commodity Futures Trading Commission (CFTC).

Hughes alleges that the prediction markets have illegally rebranded sports betting as “sports event contracts,” claiming they are financial derivatives under the CFTC’s jurisdiction. The independent federal agency has agreed that sports event contracts are within its authority.

Along with the prediction markets, Hughes’ complaint names exchanges and clearing houses, such as CME and Crypto.com, as defendants. The defendants also include several market makers, or financial companies that provide liquidity to prediction markets by taking the other side of a customer’s trade.

Atypical Injury Lawsuit

Hughes has not suffered direct financial injury from Polymarket, DraftKings, and the other defendants doing business in South Carolina. Instead, Hughes is pursuing financial damages through a law that dates back centuries to Great Britain.

The 1710 “Statute of Anne” primarily dealt with copyright law, but it also included a provision concerning gambling debts, allowing a person harmed financially by gambling to pursue recovery through legal action.

As with most things British at the time, the Statute of Anne became embedded in American Colonialism.

South Carolina maintains among the most aggressive modern applications of the Statute of Anne’s gambling clause. South Carolina Code § 32-1-20 allows anyone to recover an illegal gambling loss of $50 or more. The law adds that if the person who lost the gambling money does not initiate a lawsuit against the winner within three months, anyone in the public may pursue the damages.

Hughes is chasing customer losses incurred on Polymarket and DraftKings Predictions. Hughes’ lawsuit is represented by Motley Rice, a national plaintiffs’ law firm headquartered in Mount Pleasant, SC.

Reality is quite simple. Defendants incite, offer, and collect winnings from illegal wagers placed by South Carolinians on the outcome of sporting events. These wagers are functionally identical to those found in casinos, sportsbooks, and other traditional gambling establishments.”

Motley Rice attorney T. David Hoyle

“Hughes seeks to recover the losses from South Carolina residents won by the Defendants through the illegal sports betting operations they facilitate. In addition, and as expressly contemplated by the statute, Mr. Hughes seeks three times the amount of the losses as well as the costs of his suit,” Hughes’ attorneys wrote in the complaint.

South Carolina is one of 11 states where sports betting remains illegal.

Does the Case Have Merit?

The defendants have yet to respond to the litigation, which was filed in Charleston County Court on July 29.

DraftKings and Polymarket will likely ask the court to dismiss the complaint because their prediction markets are federally regulated and therefore immune from the South Carolina Statute of Anne.