Fight takes place in Impel Down. If Magellan doesnt have Haki, Doflamingo is forbidden from using it. If he does in your opinion then Haki is fair game.
Doflamingo wins if he can sit back and spam projectile attacks such as overheat before Magellan can dish anything out, otherwise Magellan wins due to the confined space of Impel Down's floors and the range of Hydra.