A recent surge in the value of retro Nintendo video game cartridges is allegedly the result of fraud by grading company Wata Games and collectibles auction company Heritage Auctions, according to one journalist’s exposé. All year long, mint copies of vintage games like The Legend Of Zelda and the original Super Mario Bros. have been selling at auctions for millions of dollars, shattering world records almost as soon as a new one was set.
This retro gaming price boom began back in March, where an unopened copy of Super Mario Bros. was sold for over $310,000. After that, a sealed early NES R copy of The Legend Of Zelda broke the record for Most Expensive Game with a final price tag of $870,000 in July. Both of these games were sold at Heritage Auctions, which has auctioned off other priceless relics of gaming history like a prototype of the unproduced Nintendo PlayStation console.
As reported by VGC, journalist Karl Jobst recently posted a bombshell YouTube video claiming that Heritage Auctions has been part of a scheme to inflate the prices of old video game cartridges for an increased profit. He claims that Heritage co-founder Jim Halper and Wata Games president and CEO Deniz Kahn were the ones leading this fraud operation, as Wata directors artificially raised the value of games they’ve graded. Furthermore, very few of the games being sold off at Heritage Auctions were actually purchased by game collectors. Heritage Auctions has since denied these accusations, with a spokesperson claiming that Jobst’s video contains “many misstatements.” A company spokesperson from Wata Games gave the following statement to Screen Rant.
"Wata Games is the trusted leader in collectible video game grading and we're honored to play a key role in this booming industry that we are incredibly passionate about. We're humbled by the support of our thousands of customers who trust us to provide accurate and transparent grading. 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."
Watch Karl Jobst's exposé on YouTube here.
Update (8/26/2021 4:00 PM ET): Heritage Auctions has since offered a statement on the video, denying the collusion and fraud allegations. The full statement reads:
Heritage Auctions has seen the recent speculation about alleged market manipulation in the collector video-game marketplace. The company and its founders want to ensure all those who love the hobby as much as we do that Heritage has always acted with the utmost integrity and has never falsely inflated the collector video-game marketplace or any other.
Heritage has worked tirelessly for more than four decades to ensure the best possible experience for our consignors and clients. Transparency and integrity are the cornerstones of our business, and since our founding in 1976, we have earned a reputation as trusted stewards of the collectibles hobby.
Our co-founder Jim Halperin, a well-known collector across several categories, was an early believer in the collectible video-game marketplace, and has been an active participant in that arena for several years. Indeed, Jim's participation — including his purchase of the first six-figure video game — was not only disclosed, but was widely publicized by Heritage Auctions.
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.
Heritage prides itself on transparency, which is why we post every result from every auction and maintain that information in our permanent archive, which is accessible by anyone who is interested in that information, including Heritage's 1.5 million registered bidders worldwide. Heritage and Jim wholeheartedly agree that as the video-game marketplace continues to evolve and mature that population reports are an essential component needed to maintain its transparency.
Yes, Heritage employees do consign and bid on items for their personal collections, as disclosed in our terms and conditions. Jim is well known as one of the world's greatest collectors of EC comics, original comic-book art and Mad memorabilia. But as we always say, an item is only worth what two bidders are willing to pay for it, and Heritage strives to make the playing field level for all.
As to the question of regulatory fines, in 1989 Jim and co-founder Steve Ivy reached a settlement with the Federal Trade Commission arising from allegations related to grading and the marketing of coins by an unrelated third party. Heritage Auctions settled for $1.2 million to avoid protracted litigation and admitted no wrongdoing. As Halperin himself said in 2004 on the company's website, "I'm glad the FTC came in, cracked down on some of the practices in the industry and weeded out some of the bad apples, allowing us to alter our business model profitably, and serve a much larger and faster growing clientele." This settlement had nothing to do Heritage Auctions.
We founded Heritage Auctions 45 years ago as an auction house by collectors for collectors.
Heritage Auctions isn’t the only auction house that has been making headlines by selling high-profile copies of retro video games. Earlier this month, yet another copy of the original Super Mario Bros shattered records with a final price of $2 million after a bidding war at rival collectibles site Rally - not too long after Heritage's Legend Of Zelda auction. Shortly before that, eBay set the record asking price for a game cartridge with a $1 million gold copy of Nintendo World Championships.
The recent surge in final auction prices for old-school games like Super Mario Bros. and The Legend Of Zelda has surprised a lot of people. If Karl Jobst's allegations are true, then it looks like some of the craziest stories to come out of the gaming auction circuit, such as that record-breaking Legend Of Zelda cartridge, could be the result of fraud.
Source: VGC, Karl Jobst/YouTube