Why not "We're losing the game"?
Because this sentence is in the past tense, and so the translation also has to be in the past tense
Wir verlieren das Spiel = We are losing the match.
Wir verloren das Spiel = We lost the match.
What about (wir haben das Spiel verloren)?
That's also possible.
A constructive suggestion would be to remove lose from the hint if it's past tense always.