Coinbase compensates users after Kalshi's erroneous Michigan game settlement
Crypto platform honors mistaken payouts while correcting Michigan prediction market results.
1The disputed game moment
Michigan's 13-12 victory over Western Michigan became controversial when officials restored 1 second after the game appeared over. This allowed a final Hail Mary touchdown pass. Broadcast footage showed the clock at zero before the critical play, sparking debate about the officiating decision that ultimately changed the game's outcome.
2Kalshi's premature settlement
The prediction market platform settled bets based on Western Michigan's apparent win before the official review concluded. Kalshi processed approximately $18.6 million in trades based on the initial outcome, later admitting they 'wrongly and prematurely settled' the market. This triggered a chain reaction affecting multiple platforms.
3Kalshi's corrective action
After reversing initial payouts, Kalshi reimbursed traders who were mistakenly treated as losers and paid positions matching Michigan's official win. The company stated they 'corrected the result to a Michigan win, making sure all Kalshi customers got paid out correctly,' demonstrating standard prediction market error resolution procedures.
4Coinbase's divergent approach
Unlike Kalshi, Coinbase chose not to reverse payouts made under the original incorrect settlement. The crypto platform blamed Kalshi for the 'erroneous settlement' that caused underpayments but decided to let customers keep wrongful winnings while crediting affected users with full correct amounts - an unusual dual compensation strategy.
5Technical breakdown
Coinbase identified the error as stemming from Kalshi's data feed that showed positions being underpaid. Screenshots reviewed by CNN revealed Coinbase manually recalculating balances for all affected accounts. The company's statement emphasized their system wasn't at fault, shifting responsibility to Kalshi's settlement process.
6Market implications
The incident highlights operational risks in prediction markets tied to live events with potential officiating controversies. With $18.6 million in trading volume, the Michigan game market's size shows growing mainstream adoption of sports outcome speculation, raising questions about error protocols across platforms.
7Industry response
Western Michigan's athletic department sought clarification but declined to appeal the controversial call. Meanwhile, Michigan coach Kyle Whittingham called the finish 'one for the history books.' The differing approaches by Kalshi and Coinbase demonstrate how platforms handle settlement disputes differently.
8Future safeguards
This incident may prompt prediction markets to implement delays for markets tied to live sporting events pending official reviews. The $18.6 million volume suggests significant financial stakes, making error prevention crucial. Coinbase's decision to honor both correct and incorrect payouts sets an expensive precedent.