"Yes, I am watching the game."
Translation:ʻAe, ke nānā nei nō au i ka pāʻani.
Aloha e @Lois985131, ʻae, this is a good question. The answer lies in the function of "ka pāʻani." In this sentence, it is the direct object of "to watch." Similar to how in "I am eating the banana," "the banana" is the direct object in relation to what you are eating. What you are watching is "the game," and so you would use the "i" here. It is not explaining where you are watching. That would have been expressed with your version of the sentence.
"ʻae, ke nānā ne au ma ka pāʻani." Would read as "yes, I am watching at the game."
Hope this helps a bit!
This is a user forum and you're not likely to get an answer here. Did you use the report flag to mark your entry as "my answer should have been accepted"? Do you have a screen shot you can post a link to here so we can see if maybe we can help you find an error in your entry? Or maybe you can send a screen shot to https://support.duolingo.com/hc/en-us/articles/204728264-How-do-I-report-a-bug- where the staff will be able to review the submission.