Retro game price ‘manipulation’ controversy skyrockets in court

The market frenzy leading to record prices for retro games appears to have slowed since last year, but frustration with the collectibles grading company at the center of the spike has not abated. Earlier this week, a number of Wata Games customers filed a class action lawsuit in an attempt to stop some of the seemingly shady business dealings that allegedly sparked the recent gold rush in retro games like Super Mario 64 and The Legend of Zelda.

Filed in the Central District Court of California, the class action (first spotted by podcaster Pat Contri) is on behalf of Jacob Knight, Jack Cribbs, and Jason Dohse, as well as others potentially “in the same situation.” The lawsuit accuses Wata Games and owner Collectors Universe of creating a bubble around collecting retro games, 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 a fee to expedite the process and a 2% commission on games over $2 ($3,500) ($3,471). And now some of those collectors are claiming that Wata ripped them off by boosting the retro gaming market and then charging a premium for his services while failing to fire the game owners who sent him to grade in a timely manner.

Wait times for collectible grading houses have increased during the pandemic, but some of the delays reported with Wata are particularly long. The longest estimated waiting time is 150 days. However, a customer show Kotaku screenshots of their order to have a copy of Fire Emblem: Path of Shard for the ranked GameCube. He was originally placed in November 2020. They said they only got him back this week, more than 18 months later.

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

The lawsuit’s other claims of broad manipulation of the retro gaming market aren’t new. In fact, most of the allegations stem from a mini-documentary on the subject by YouTuber Karl Jobst released last August. He accused Wata Games, Heritage Auctions and various collectors of colluding to increase the value of (supposedly) particularly rare retro games through subjective ratings, secret bidders and record sale prices.

Much of the criticism of Jobst and others at the time focused on a few key events. The highest price for a retro game in 2017 was US$30,000 ($41,646) for a high-quality sealed copy of Super Mario Bros. In 2019, a Wata-rated copy of the same game sold for an impressive US$100,150 ($139,028) at a widely publicized private auction. The buyers included three people, one of whom was Heritage Auctions founder Jim Halperin. Later that same year, Wata founder Deniz Kahn (the head grader) appeared on the TV show Star pawns say that the same copy was worth up to US$300,000 ($416,460). Last year, what Wata described as an ultra-rare boxed and sealed variant of Super Mario Bros. was selling for $2 million ($3).

Kahn, Halperin and others named in Jobst’s documentary have denied any wrongdoing and, to be fair, no evidence of actual fraud has ever surfaced. A few months later, Wata began responding to widespread demand from collectors by publish population reports for various games. In the world of collectibles, population ratios are estimated guesses about the number of sealed objects, sets in this case, of a certain quality that still exist in nature based on previous research and work . They are incredibly useful for collectors and have demonstrated greater transparency from Wata. Notably, the months that followed saw no further record-breaking retro game auctions.

In a updated video posted last December, Jobst pointed out that two copies of Super Mario 64 had recently sold for significantly less than at a Heritage Auctions auction earlier that year. At the Heritage auction in July 2021, a Wata-rated sealed copy with a “9.8 A++” rating sold for US$1,560,000 ($2,165,592). At an auction held by competing auction house Goldin Auctions in September, a copy of the same rating went for just US$800,000 ($1,110,560). Then at a Goldin’s auction in October, a game copy (Wata rating industry rival) VGA was rated “MINT 95” went for just US$240,000 ($333,168). These prices would still have been unimaginable just a few years ago, but signal that the retro gaming market may have recently undergone a major correction.

Whether Retro Games’ new class action lawsuit against Wata will go anywhere is an entirely different matter. “The plaintiffs seek an injunction requiring [Wata] to immediately stop making misrepresentations about expected turnaround times for filing services,” it read. Those suing also want “restitution” for delays and the potential difference in commissions if retro game prices weren’t inflated.