Millions for retro games? Grading firm Wata sued over price manipulation

Do you remember the exorbitant prices that some rare-quality retro games fetched at auction house Heritage Auctions last year? The $660,000 for an unopened Super Mario Bros., the $1.5 million for Mario 64, or the $430,000 for Sonic?

Wata and Heritage Auctions have long been suspected of being unfair, but now Wata, the grading company that ranks these games based on their condition, is launching a specific class action lawsuit.

An estimated 10,000 individuals who once paid Wata money to have games rated (thanks, VGC) have since May 10 accused Wata of “deliberately manipulating the retro video game market” and “unfair business practices.” Above all, Wata boss Deniz Kahn is mentioned there.

The plaintiffs allege that Kahn and Heritage Auctions co-founder Jim Halperin — a once-investor in Wata and a member of its advisory board — worked together to manipulate the retro games market. This was done through promotions and media interviews in which the two allegedly claimed game prices were going up.

And well, you remember how it was last year, see above.

Before Wata entered this market in 2018, retro game prices were… I don’t want to say more modest, but in 2017 the most expensive Super Mario Bros. was $30,000. The following year, a version graded by Wata and sold by Heritage Auctions went under the hammer for more than triple. At this auction, Halperin is accused of having bought the game himself, along with two other men.

The lawsuit emphasizes that Wata and Heritage Auctions benefited from this relationship and therefore had an interest in manipulating the prices. Wata can be guaranteed a percentage participation for the classification of a game. Heritage Auctions takes 20 percent purchase premium from the buyer and 5 percent from the seller.

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“Heritage Auctions benefited from higher commissions from sellers and buyers,” the documents said. “Halperin benefited from increased value of his game. Wata benefited from increased awareness and demand for grading services,” according to the lawsuit. The collectors were not aware of the relationship between Wata and Heritage.

It went so far that Wata couldn’t keep up with the grading of games, although the website still promised fast processing.

In addition, the lawsuit again alleges that Wata employees sold games rated by their company, which is against Wata’s own rules. Among others, Wata’s Chief Advisor Mark Haspel was accused of this practice last year. It would be interesting to hear what some of the buyers of these outrageously expensive retro games think of the accusations of price gouging.