Obvious Error Rules in 2026: How Sportsbooks and Prediction Markets Void Bad Prices

The quick answer

• Sportsbooks: an obvious error clause, which Caesars also calls a palpable error, lets the book void a bet or pay it at the "correct" price when the odds were clearly wrong.

• What counts: odds materially different from the rest of the market, a price that ignores the score or news, a bet taken after the result was known, or teams listed wrong.

• Regulator: in Massachusetts, FanDuel, BetMGM and Caesars say they won't void a bet for obvious error without the Gaming Commission's prior approval, and DraftKings says its voids are subject to that approval.

• Prediction markets: a trade is normally canceled or adjusted only if it's outside a "No Cancellation Range" around fair value. Kalshi's range is 20 cents either side; Novig's is 50 cents.

• Arb risk: the leg priced far from the market is the one most likely to be voided or repriced, which leaves the other leg on its own. With a 50-cent range, a prediction-market leg on Novig taken near fair value is unlikely to be unwound.

What an obvious error clause is

It's the part of a sportsbook's house rules that lets it take back a bet it says it shouldn't have accepted. The usual remedies are voiding the bet, which returns the stake, or resettling winners at the price the book says it should have offered.

Prediction markets don't post prices, since users do, but they have rules for trades that print far from fair value. The federal rule, 17 CFR 38.157, says a designated contract market "must have the authority to adjust trade prices or cancel trades" to deal with platform malfunctions or "errors in orders," under standards that are "clear, fair, and publicly available."

How we checked

We opened each source on 7 October 2026: the house rules DraftKings, FanDuel, Caesars and BetMGM file with the Massachusetts Gaming Commission, the Commission's void request form, the text of 205 CMR 238.35, Novig's Ludlow Exchange rulebook (version 1.3) and Kalshi's exchange rulebook (version 1.29, dated 17 August 2026).

What the sportsbooks' rules say

DraftKings defines an "Error" in seven parts. Among them: a bet at odds "meaningfully different" from what "sportsbooks similarly situated to DraftKings" offered in the US; a bet where the odds "reflect an incorrect score or situation"; a bet taken after news that affects the odds but before the odds were updated; and past-posted bets. Its void rule says an Error means a bet "will be voided, totally or partially, irrespective of the bet being settled," and adds that in Massachusetts, voiding "is subject to approval by the Massachusetts Gaming Commission."

FanDuel's clause opens with the approval step: it "will not cancel or void a wager due to an 'obvious error' without prior approval of the MGC." Its list covers odds "materially different from those available in the general betting market," odds "clearly incorrect given the chance of the event occurring," bets on a market whose outcome was already determined, and teams listed in the wrong order. With approval, it can settle winning bets at "the 'correct price,' as reasonably determined by FanDuel Sportsbook."

Caesars uses both names: "obvious errors, also referred to as palpable errors." It won't "cancel, void, or resettle at the correct odds" without MGC approval, and it may hold wagers while it resolves an error. Its list includes odds misquoted through human or system error, bets accepted on a game that should have been suspended, and odds "materially different from those available in the general market."

BetMGM's clause follows the same pattern, with the option to settle at the "correct price" or void.

All four books measure an error against the wider market, which is the same comparison an arb scanner makes.

What the regulator requires

In Massachusetts an operator can't void a wager under review until the Commission rules on it. The Gaming Commission's void request form, which cites 205 CMR 238.35, wants an incident report with the root cause, every wager on the market with the ones to be voided marked, the total stake and number of patrons affected, the relevant house rule, and an explanation of why voiding is in the best interests of the Commonwealth or ensures the integrity of the industry. The form says the resolution for patrons would include, "at a minimum, the amount wagered returned to the patron." The Commission then issues a written order approving, denying or conditionally approving the request.

How prediction markets handle erroneous trades

Kalshi's Rule 5.11 starts from the position that trades stand. It says there will generally be no cancellation or adjustment "except in extraordinary circumstances," and an erroneous trade "made due to Trader error" does not count. The exception is for market makers and advanced API users whose automated systems malfunction despite reasonable safeguards. A review request has to arrive within 15 minutes of the trade and before expiration. If Kalshi cancels or adjusts a trade, the trader whose order caused it pays $3,000, refunded only if a platform malfunction caused the error. Kalshi then sets a fair value and a 20-cent No Cancellation Range around it. A trade inside the range stands; one outside it may be canceled or adjusted. Kalshi has adjusted trades that printed far from fair value under its error-trade rules before.

Ludlow Exchange's Rule 5.8, the rule behind Novig, says there will "generally be no cancellation or adjustment of an erroneous Trade except in extraordinary circumstances." A member can request review within 15 minutes of the trade and before expiration. Ludlow calculates a fair market value and adds 50 cents either side to set its No Cancellation Range, which it can override in extraordinary circumstances. Trades inside it stand, and decisions are published on its website and are final. Rule 5.8 doesn't charge for a review request. Separately, Rule 5.5 says that if the trading system itself mishandled an order, the order is canceled and both accounts are returned to where they were before the trade.

On a $1 contract, a 50-cent range means a trade has to print more than half the contract's value away from fair before it can be canceled. A trade you took at a good price is unlikely to be unwound on Novig, and a trade you entered by mistake is unlikely to be rescued.

What it means for an arb leg

The leg most at risk is the sportsbook leg that's out of line with the market.

Say a book shows Team A at +250 (3.50) while other books have A around -150. On a prediction market, Team B trades at 41 cents. The implied probabilities sum to 0.2857 + 0.41 = 0.6957, which looks like a 43.7% return.

You'd stake $100 on A at 3.50, returning $350, and buy 350 B contracts at 41 cents for $143.50, also returning $350, for a total cost of $243.50.

The prediction-market leg at 41 cents sits a cent from the 40 cents implied by -150 on A, inside both Kalshi's and Novig's ranges, so it stands whatever the book does. A void leaves you with a $143.50 bet on B, and a correct-price resettlement means you're down $76.83 if A wins.

The example assumes no fee on the B leg. On a venue that charges a taker fee, add it to the $143.50.

What to look for

• Benchmark: compare the price with the rest of the market before you bet it, since a large gap is what the clauses above treat as an error.

• Remedy: read whether your book voids or resettles at a correct price, since each leaves a different hole.

• Regulator: in Massachusetts, a void for obvious error needs Commission approval and the stake returned at minimum.

• Range: on prediction markets, check the No Cancellation Range, since a wider one leaves more trades standing. Kalshi's is 20 cents, Novig's is 50.

Obvious error FAQ

What is a palpable error in sports betting?

It's a price a sportsbook says was obviously wrong when it took the bet. Caesars uses "obvious error" and "palpable error" for the same thing, and lets itself void or resettle such bets with regulator approval in Massachusetts.

Can a sportsbook void my winning bet?

Yes, under its obvious error clause, and DraftKings' rules allow it even after the bet has settled. In Massachusetts the books say they need the Gaming Commission's prior approval to void for obvious error.

Do prediction markets cancel trades made at the wrong price?

Rarely. Both leave a trade alone if it's inside a No Cancellation Range around fair value, 20 cents on Kalshi and 50 cents on Novig, and Kalshi doesn't treat trader error as grounds.

How long do you have to dispute a trade on Kalshi or Novig?

On both, it's 15 minutes from the trade and before the contract expires. Novig's Rule 5.8 doesn't charge for a review request. If Kalshi cancels or adjusts the trade, the trader whose order caused it pays $3,000, refunded only if a platform malfunction caused the error.

Sources

All opened 7 October 2026.

17 CFR 38.157, Real-time market monitoring: ecfr.gov/current/title-17/section-38.157

Massachusetts Gaming Commission, Void Requests form (updated 10 October 2024): massgaming.com/wp-content/uploads/Void-Requests-Form-Updated-10.10.24.pdf

205 CMR 238.35, Cancelled or Voided Wagers, via Cornell's Legal Information Institute: law.cornell.edu/regulations/massachusetts/205-CMR-238-35

DraftKings Massachusetts Sportsbook House Rules (implementation date 26 August 2025), massgaming.com

FanDuel Massachusetts House Rules (file dated 30 July 2026), massgaming.com

Caesars Sportsbook Massachusetts House Rules (file dated 3 August 2026), massgaming.com

BetMGM Massachusetts House Rules (file dated 22 April 2026), massgaming.com

Kalshi Exchange Rulebook v1.29 (17 August 2026), Rule 5.11, kalshi.com/regulatory/rulebook

Ludlow Exchange, LLC Rulebook v1.3: support.novig.com/en/articles/16075446-ludlow-exchange-llc-rulebook