Kalshi Misfired on Michigan Football Market, Handing $18.6M to Wrong Side

Kalshi resolved its Western Michigan vs. Michigan prediction market prior to the game's conclusion, distributing funds to those who had bet on the losing side. Subsequently, the platform retrieved those payments.

By the moment the final outcome was determined, the market had seen $18.6 million in volume. Participants on each side observed their account balances shift on two occasions within a short period.

How Kalshi Settled the Michigan Game Too Early

The Wolverines were down 12-7 as the timer hit zero following a failed Hail Mary pass. Players from Western Michigan had already taken to the field in celebration.

After reviewing the play, officials determined that a Western Michigan defender had made contact with the ball while out of bounds. The clock was then adjusted to show one second remaining.

With that extra second added, quarterback Bryce Underwood tossed a 47-yard touchdown to JJ Buchanan, clinching a 13-12 win for Michigan.

Kalshi had already deemed the expired clock as the definitive result. It compensated those who bet on Western Michigan, but subsequently reversed those transactions. The exchange then refunded the incorrectly designated losers and ultimately paid those who held Michigan contracts.

Kalshi's sports-focused social media account had highlighted a particular $2,265 wager on Western Michigan during the matchup, which was set to yield $93,201.

A Kalshi user has a $2,265 position on Western Michigan to beat Michigan.

Potential payout of $93,201 if the score holds 🤯 https://t.co/1d6sFt5ILA

— Kalshi Sports (@KalshiSports) September 6, 2026

“Kalshi confirms they wrongly and prematurely settled the “Western Michigan vs. Michigan” market, as if Michigan lost. They clawed back payments to initial incorrect “winners,” reimbursed the initial “losers,” and then paid the right people. (This market saw $18.6m volume.)” Marshall Cohen of CNN noted.

Why the Settlement Error Matters for Prediction Markets

The eventual outcome that Kalshi settled is also subject to debate. Terry McAulay, an NBC rules analyst, expressed doubts about the officials' calculation of that one second.

“The ball isn’t even close to touching a player when it goes to zero,” CBS reported, citing Terry McAulay, NBC rules analyst.

BeInCrypto pointed out a comparable error in July, when Coinbase distributed an AI-created World Cup outcome to users ahead of the match. Coinbase channels its prediction offerings via Kalshi.

The incident's timing is particularly inconvenient, given that a Michigan judge ordered Kalshi to cease offering sports contracts to state residents as of September 1, with a $500,000 daily fine for noncompliance.

LATEST: ⚖️ A Michigan court has ordered Kalshi to keep blocking state residents from sports-related event contracts until a final ruling in the case. pic.twitter.com/OGPvtEZft6

— CoinMarketCap (@CoinMarketCap) September 3, 2026

Just five days afterward, the exchange botched a Michigan football market. Prediction markets are already crossing paths with sports law, and detractors now have a tangible settlement error to reference.

Kalshi corrected the payouts within a few hours; however, whether it discloses the faulty source or timing rule will carry more significance than the refund itself.