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Gaming the system: Auction house accused of fraud following record-breaking video game sales

The auction house at the centre of several record-breaking vintage video game sales has been accused of conspiring with a grading company to artificially inflate prices.
The auction house at the centre of several record-breaking vintage video game sales has been accused of conspiring with a grading company to artificially inflate prices. On 6 August, American-based Heritage Auctions sold an unopened copy of 1985 Nintendo Entertainment System (NES) game Super Mario Bros for US $2 million, making it the most expensive game ever sold. Sold to an anonymous bidder, the eye-watering sum broke the previous US $1.5 million record set on July 11 for a mint-condition copy of 1996’s Nintendo 64 title Super Mario 64 by a cool half a million. And if you thought Super Mario 64’s 26-day stint as the world’s most expensive game was short lived, spare a thought for 1988’s The Legend of Zelda, which held the title for only 3 days after selling for $870,000 on July 9, 2021. Although these sales have come at a time when collectable goods, including vintage video games has been heating up, YouTuber and video game speedrunner Karl Jobst notes each sale has been bound by a common thread – and it’s not that all three are Nintendo titles. In an hour-long video, Mr Jobst notes that all three games have been sold through Heritage Auctions, and each was graded by collectibles valuation company Wata Games prior to going under the hammer. Both companies, Mr Jobst noted and video game news site Kotaku later confirmed, appear to be closely intertwined with key personnel from both companies often consulting for others. These relationships, paired with the rapid acceleration in game prices have now prompted accusations of fraud, with Mr Jobst alleging Heritage Auctions and Wata Games are in bed together, artificially inflating game prices to increase the tickets they clip. Both companies have publicly denied the claims, rejecting all claims of wrongdoing. The prices paid for Super Mario Bros cartridges at auction tell a central part of the story behind these allegations. In 2017, a still-sealed copy of the game sold for US $30,000 – an unusual price for the game, which was one of the most common titles for the NES console, but one which many considered reasonable given this particular version was an early version of the game in immaculate condition. Two years later, another copy sold for US $100,000 – the first six-digit price paid for a video game. This latest US $2 million sale marks an increase of 6500% in four years. That jump alone is enough to raise eyebrows, but it’s the 2019 sale that has since received the most scrutiny. Not only has the game been graded by a newly-founded Wata Games, it was jointly purchased by Heritage Auctions founder and co-chair Jim Halperin, alongside coin dealer Rich Lecce, and game store Just Press Play owner Zac Gieg. Mr Halperin also used the purchase as a press opportunity, putting out a statement on the sale and commenting on the growth in demand for vintage video games.  That press release also quoted Wata Games president Deniz Kahn, and announced Wata Games was now valuing games for Heritage Auctions. Mr Halperin was also found to have previously worked as an adviser to Wata Games, while the latter has listed Heritage Auctions as a ‘business partner’ since its inception in 2017. With both businesses charging percentage-based fees for their services, both stand to benefit from higher video game prices, though both businesses however strongly deny any wrongdoing.
“Heritage strongly refutes any allegation that it or its officers are involved in shill bidding, ‘market manipulation’ or any similarly illegal or unethical practices,” a spokesperson for Heritage Auctions said in a statement.
“Heritage prides itself on our transparency and being a place built by and for collectors. With this in mind, we welcome the opportunity to discuss the video-game marketplace further, and would invite Mr. Jobst to our world headquarters in Dallas to tour our operations and speak further with leadership.” A spokesperson for Wata Games said the business is honored to play a “key role” in the “booming” market for collectible video games and similarly rejected Mr Jobst’s claims. “We’re humbled by the support of our thousands of customers who trust us to provide accurate and transparent grading,” they said.
“The claims in this video are completely baseless and defamatory and it is unfortunate that Mr. Jobst did not contact us to give us the opportunity to correct him.”
 
Sources:  

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