Wednesday, August 10

Skyrocketing Retro Game Price ‘Manipulation’ Controversy Goes To Court

Wata Graded retro games await their fate at a Heritage auction.

Screenshot: Heritage Auctions / Kotaku

The market frenzy leading to record-breaking prices for retro games appears to have slowed since last year, but frustration over the collectible grading firm at the center of the spike hasn’t. Earlier this week a number of Wata Games customers filed a class action lawsuit attempting to put an end to some of the seemingly shady business dealings that allegedly sparked the recent gold rush in classic games like Super Mario 64 and The Legend of Zelda.

Filed in the Central District Court of California, the class action lawsuit (first spotted by podcaster Pat Contri) is on behalf of Jacob Knight, Jack Cribbs, and Jason Dohse, as well as other potentially “similarly situated” individuals. They accuse Wata Games and owner Collectors Universe of pumping up a bubble around retro game collecting, misleading customers, and a “pattern of racketeering activity.”

Basically, the way it works is that collectors send their games to Wata to determine how pristine and rare they are. Wata charges fees to expedite the process and a commission of 2% on games valued at over $2,500. And now some of those collectors are claiming Wata ripped them off by hyping up the retro game market and then charging a premium for its services while failing to return games owners sent it to grade in a timely manner.

Wait times for collectible grading houses have spiked during the pandemic, but some of the reported delays with Wata are especially long. The longest estimated wait time is 150 days. However, one customer showed Kotaku screenshots of their order to have a copy of Fire Emblem: Path of Radiance for the GameCube graded. It was originally placed in November 2020. They said they only got it back this week, over 18 months later.

Wata Games did not immediately respond to a request for comment.

The lawsuit’s other claims about broad market manipulation are nothing new. In fact, most of the allegations stem from a mini-documentary on the subject by YouTuber Karl Jobst published last August. It accused Wata Games, Heritage Auctions house, and various collectors of colluding to drive up the value of (supposedly) particularly rare retro games through subjective gradings, secret bidders, and record-shattering sale prices.

Much of the criticism from Jobst and others at the time focused on a few key events. The top price for a retro game in 2017 was $30,000 for a high-quality sealed copy of Super Mario Bros. In 2019, a Wata-graded copy of the same game sold for an eye-popping $100,150 through a widely publicized private auction. The buyers included three people, one of whom was the founder of Heritage Auctions house, Jim Halperin. Later that same year, Wata founder Deniz Kahn (the chief grader) went on the TV show Pawn Stars to say that the same copy was worth as much as $300,000. By last year, what Wata described as an ultra-rare boxed and sealed variation of Super Mario Bros. was selling for $2 million.

A VGA rated copy of Super Mario 64 is sold at Goldin Auctions.

Kahn, Halperin, and others singled out in Jobst’s documentary denied any wrongdoing, and to be fair no proof of any actual fraud ever surfaced. A few months later, Wata started to fulfill one widespread collector demand by releasing population reports for various games. In the world of collectibles, population reports are estimated guesses about how many sealed items, games in this case, of a certain quality still exist in the wild based on research and past work. They are incredibly helpful for collectors, and demonstrated a show of greater transparency from Wata. Notably, the months since have not seen any further record-breaking retro game auctions.

In an updated video posted last December, Jobst pointed out that two copies of Super Mario 64 had recently sold for dramatically less than at a Heritage Auctions auction earlier that year. At the Heritage auction in July 2021, a Wata-graded sealed copy with a rating of “9.8 A++” sold for $1,560,000. At an auction run by competing auction house Goldin Auctions in September, a similarly rated copy went for just $800,000. Then at a Goldin auction in October, a copy of the game (Wata grading industry rival) VGA had rated as “MINT 95” went for just $240,000. Those prices would still have been unimaginable just a few years ago, but signal the retro game market might have recently undergone a major correction.

Whether the new class action lawsuit against Wata will go anywhere is an entirely different question. “Plaintiffs seek an injunction requiring [Wata] to immediately cease making false statements about expected turnaround times for grading services,” it reads. Those suing also want “restitution” for delays and the potential difference in commissions if retro game prices were not inflated.



Reference-kotaku.com

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