DraftKings and Polymarket Face South Carolina Lawsuit
United States.- 4 August 2026 www.zonadeazar.com South Carolina attorney Jame M. Hughes, of Motley Rice, has filed a lawsuit against DraftKings Predictions and Polymarket, accusing the companies of offering unauthorised gambling products in the state.
The action argues that describing the products as prediction markets or event contracts does not change the underlying nature of transactions in which customers risk money on future sporting outcomes.
News Details
The complaint alleges that both companies breached state law by facilitating and profiting from transactions connected with sporting events without formal authorisation to offer gambling in South Carolina.
According to the claimant’s argument, the platforms cannot avoid local gambling requirements merely by presenting their products as financial instruments or prediction markets.
Hughes maintains that the case rests on a straightforward premise: the terminology adopted by the companies does not alter the practical operation of contracts through which participants expose money to an uncertain event outcome.
Industry Context
The lawsuit forms part of an expanding regulatory conflict across the United States. State authorities, casino associations and private claimants are challenging the ability of prediction markets to offer sports contracts without complying with the licensing, taxation and supervisory requirements imposed on conventional sportsbooks.
Prediction market companies, meanwhile, generally maintain that event contracts are financial products and that contracts traded through federally authorised markets fall under the supervision of the Commodity Futures Trading Commission (CFTC).
This difference of interpretation has already produced disputes in jurisdictions including New York, Washington and Michigan, as well as proceedings targeting Kalshi and other operators.
Consumer Risks
The complaint also connects the expansion of these products with the financial and social harm associated with problem gambling.
Hughes argues that the consequences are not confined to customers already identified as vulnerable or compulsive gamblers. In his view, any consumer may suffer significant financial losses when accessing sports products offered outside the protections established by state gambling regulation.
The claim reinforces one of the principal arguments advanced by critics of the sector: although event contracts are presented as market transactions, their accessibility, promotion and mechanics may generate risks comparable to those associated with sports betting.
Company Position
At the time of publication, the available report did not include formal responses from DraftKings Predictions or Polymarket addressing the specific allegations in the lawsuit.
Companies operating in this sector have generally defended the legality of event contracts under the federal framework and rejected the argument that these products should automatically be classified as state-regulated gambling.
The outcome will depend partly on how the court characterises the products and interprets the relationship between South Carolina gambling law and federal regulation of contract markets.
Next Steps or Impact
The lawsuit could increase judicial pressure on DraftKings and Polymarket during a period of rapid expansion for sports prediction markets.
A decision favouring the claimant could result in restrictions, financial restitution or changes to the availability of these products for South Carolina residents. It could also encourage further private actions in other states.
A ruling for the companies would strengthen the argument that sports event contracts may operate under a regulatory regime distinct from conventional betting.
The case will therefore join the growing number of proceedings seeking to determine whether sports prediction markets are federally regulated financial instruments or gambling products subject to individual state laws.
Edited by: @_fonta
