Game rating firm Wata Games is the target of a new US class action lawsuit accusing it of unfair business practices and manipulating the retro gaming market for its own benefit.
As reported by VGC, the lawsuit was filed on May 10 in the Central District of California, representing members of the group (estimated at 10,000 people) who all paid for the games to be rated and other services by Wata. He accuses Wata of “engaging in affirmative acts to manipulate the retro video game market” and “engaging in unfair business practices”, specifically pointing the figure at Wata Chairman and CEO Deniz Kahn.
Kahn is accused of working with Heritage Auctions co-founder Jim Halperin – a former Wata investor and advisory board member – to manipulate the retro games market through promotional efforts and media interviews, in which the pair allegedly claimed that retro gaming prices would continue to rise.
Notably, Wata and Heritage Auctions have been linked to a string of tantalizing vintage game sales over the past few years. An immaculate sealed copy of Super Mario 64 appraised by Wata and auctioned off by Heritage sold for $1.56 million last July and, a few weeks later, a copy of Super Mario Bros. run by the two companies sold for a record $2 million. .
Before Wata entered the market in 2018, as stated in newly submitted court documents, the previous record was held by a copy of Super Mario Bros., which sold for around $30,000 in 2017. One year only after Wata was founded, however, was another copy of Super Mario Bros. – rated by Wata and sold by Heritage Auctions – sold for US$100,150. The lawsuit alleges that it was in fact Jim Halperin of Heritage Auctions, along with two other men, who purchased the game.
The lawsuit also points out that Wata and Heritage both benefit financially from rating and game sales, meaning they will benefit significantly from higher market prices. Wata, for example, charges a percentage of a game’s market value when ranking it – it would fetch more than $20,000 from a game valued at $1 million according to VGC – while Heritage charges a buyer’s premium of 20% and takes 5% from the seller.
“Heritage Auctions benefited from more commissions on sellers and buyers,” the court documents allege. “Halperin has benefited from the increased value of its game. Wata has benefited from increased awareness and increased demand for ranking services.
“Furthermore, the increased value of the games allowed Wata to charge even more for its grading services since prices were tied to values. Yet the relationship between Wata and Heritage Auctions was still unknown to collectors.
“Meanwhile, video game collectors rushed to send their own sealed games to Wata for filing, thinking they could sell the games for a profit as the market soared.
“Unbeknownst to collectors, Wata was massively bogged down by the rush. Yet the company advertised false and overly optimistic turnaround times on its website. Customers were not informed of the delays prior to their purchases. Wata continued to accept orders and payments from customers.”
Elsewhere, the lawsuit also resurrects allegations that Wata employees sold Wata-rated games in violation of the company’s policies on fraud and conflict with industry policies – a charge brought against the Wata’s chief adviser, Mark Haspel, last year.