A recent retro video game auction brought in millions of dollars. Since then, reports have alleged that the high auction prices may have been the result of fraud between Wata and Heritage Auctions.
Highly-graded copies of classic games such as Super Mario Bros. tended to sell for tens of thousands of dollars in the last few years. That's certainly an impressive price, but things got a little wild recently; records were broken in 2019 when a copy of Super Mario Bros. sold for $100,000. Earlier this year, a copy of the game sold for six times as much. Then, a copy of Super Mario 64 became the first game to sell for a million dollars at auction — and that record was broken nearly one month later.
It's undeniable that retro gaming auction prices have soared over the last couple of years. However, two new reports have dropped in the last week that raises some concerning questions and alleges that the rapidly-growing interest in the market may have been the result of fraud and collusion.
YouTuber Karl Jobst Breaks Down Retro Gaming Auction Controversy
The retro gaming auction controversy began when YouTuber Karl Jobst released a nearly hour-long video highlighting conflicts of interest between video game grading company Wata Games and auction house Heritage Auctions.
The video alleges, among other things, that Wata Games President and CEO Deniz Kahn had colluded with Heritage Auctions Co-Founder Jim Halperin to manipulate the retro gaming auction market through the positive press and questionable ratings. These accusations led Heritage Auctions to release a statement on the retro gaming auction controversy. Here's an important highlight from its statement:
While Heritage has a strong relationship with Wata, as well as other third-party grading companies and authenticators, Wata's grading and activities are wholly independent from Heritage or its management. Jim was indeed an early minority stakeholder in Wata, through his nonprofit foundation that provides funding for arts-, education- and health-related endeavors. "I had no idea video games would take off as fast as they did," he says of his early involvement, "but I suspected that marketplace was undervalued."
Jim divested himself of his ownership in Wata earlier this year when that company was sold. The notion that Heritage somehow colluded in order to achieve results at auction is baseless and falsely assumes that transactions are fictitious when they are in fact very much real.
Part of the apparent problem was that Wata secured a deal to work with Heritage Auctions to sell its graded games — a particularly unusual move since Wata is a relatively young company compared to other grading agencies on the market. Heritage Auctions' Jim Halperin sat on the advisory board of Wata, and that may have been a motivation for working with a grading house that didn't yet have a long track record of analyzing the quality of items.
Both VGC and Kotaku reported on the accusations raised by Karl Jobst, and Heritage Auction's statement may have brought an end to this saga. That all changed when a subsequent report was released with much more detail — and the mystery only deepens from there.
Proof Newsletter Uncovers More Details
Several days later, the Proof newsletter released a report detailing the lengthy saga of Heritage Auctions, Wata games, and a recent spike of prices in the retro gaming auction community. One of the many interesting items raised was an appearance on Pawn Stars that is categorized by the report as a thinly-veiled advertisement for Wata. At the conclusion of the segment, shop owner Rick Harrison declined to purchase an offered game for a high price at the time — although he did note that he was aware of the market's rapid growth and was considering getting into it himself.
Aside from the concerns raised about the relationship between Heritage Auctions and Wata Games, the Proof report notes that Wata actually broke open the "Bronty" copy of Super Mario Bros. rated by competing organization VGA and gave it a new grading. Surprisingly, this new grading was arguably slightly lower than VGA's assessment. This copy of the game was then used in Wata's promotional material and appears to still be highlighted on the grading house's website today (also shown in this August 25, 2021 archive of the site). Bronty took a huge risk allowing Wata to re-grade his game, but the gamble paid off — the game was purchased for $100,000 in early 2019 by Heritage Auctions Co-Founder Jim Halperin, Wata Co-Founder Richard Lecce, and Zac Grieg of Just Press Play.
Prices in the retro gaming auction space continued to rise until the absolutely stunning sale of a copy of Super Mario Bros. earlier this month for $2 million to an anonymous buyer. While the buyer remains anonymous what is known is that this WATA 9.8 A+ graded copy of Super Mario Bros. for NES is being vaulted with PWCC Marketplace, a trading card and sports collectible company that was banned on eBay less than two weeks ago over accusations of shill bidding.
In summary, the Proof's report highlights a worrying number of conflicts of interest between the people and companies that are grading, buying, and selling retro video games. The close relationships between these parties are argued to be a driving force in the rapid spike of prices for the retro gaming auction space. If these allegations prove true, it could result in serious trouble for all involved parties. I've just touched on the broad strokes of this whole controversy; you can watch Karl Jobst's video and read the Proof newsletter's subsequent report to get the full story.
Update: An update was made on the above story clarifying that it was not PWCC Marketplace that purchased the copy of Super Mario Bros. it's just being vaulted with them.