Exact same issue with the mouse here.
64GB corsiar dominator ddr4 3000mhz
ASUS ROG 1080ti strix
ASUS Xonar Xense
ASUS Strix z370 f gaming
Samsung EVO 970 plus 1TB (boot)
ADATA SX8200 series 2TB (data)
850 wt PSU
Windows 7 ultimate x64
I've downgraded my GPU drivers to 388.71, this resolves the issue with the mouse courser lag. I have noticed the same issue in another game, so its not 100% isolated to Demigod. I'm guessing some sort of memory leak, improperly updated DLL or something, because the lag will start happening around half way through a match, and become progressively worse to the point where you can freeze the game, if you continue using mouse input, same is true with the other game I've observed the issue in.
TLDR: Downgrade drivers. Problem solved.