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In the Super Bowl this year Denver was called for a false start on the very first play of the game. The ref clearly stated the false start happened before the snap.

Why was the play allowed to continue? A false start penalty is a dead ball penalty, correct?

If so, the Broncos should have been penalized 5 yards and kept the ball. No safety allowed.

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Denver was not penalized for a false start; they were penalized for illegal motion. The referee's hand signal is the same for both (hands rotating around each other).

The NFL's official play-by-play reads:

(14:53) (Shotgun) 18-P.Manning Aborted. 66-M.Ramirez FUMBLES at DEN 14, recovered by DEN-27-K.Moreno at DEN -8. 27-K.Moreno tackled in End Zone, SAFETY (56-C.Avril). Penalty on DEN-18-P.Manning, Illegal Motion, declined.

A false start is called when "an offensive player who has assumed a set position charges or moves in such a way as to simulate the start of a play, or if an offensive player who is in motion makes a sudden movement toward the line of scrimmage." (NFL Rules 7.4.2)

Illegal motion (which is not a dead-ball foul) is called when an offensive player is moving forward at the snap or is never set for one second at any point before the snap (NFL Rules 7.4.7).

Peyton Manning was moving towards the line to call an audible when the ball was snapped; but since he was not simulating a snap, it was an illegal motion and not a false start.

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