Exposing FRAUD And DECEPTION In The Retro Video Game Market

hello you absolute legends in 2017 the most expensive video game ever sold cost thirty thousand dollars it was a mint condition sealed copy of the original super mario brothers in 2021 the most expensive video game ever bought cost two million dollars but this was a very special game oh actually it was the same game that's an increase of over six thousand percent for the same game in just four years something very strange is happening in the world of video game collecting headlines are flooding the internet describing new records set for insane prices but this is an extremely recent phenomenon and one that seems to have arisen overnight for the past several decades video game collecting has honestly been pretty niche truly dedicated collectors seemed to be few and far between and even if they did amass a respectable collection there was little fame to be gathered from it in contrast to something like the art world where collectors represent the richest of society flaunting their lavish purchases video game collecting was mostly done by the purist of heart regular gamers nerds in the truest sense who were just so passionate about the hobby that they were happy to spend whatever spare cash they could scramble together to acquire a cart here or there often as cheaply as they possibly could video game collectors weren't rich but they didn't need to be either retro video games were never that expensive therefore basically anyone could do it and that was one of the great things about it all you really needed was passion and time but in 2018 something happened that would change everything the launch of a company called water games this was no ordinary launch and water is no ordinary company there is a select group of very wealthy very powerful people who are pulling the strings behind this recent spike in video game prices and those same people are making money hand over fist when i heard the news of a 1.5 million dollar super mario 64 this seemed too ridiculous for me to ignore i knew there had to be more to this story than meets the eye and boy was i not wrong this rabbit hole is deep the bubble we are seeing in video games has been seen before in other collectibles for almost half a century and the crazy thing is that each time it happens the same people are involved they know exactly what they are doing and they know how to extract as much money as possible from suckers who believe the headlines there is a lot of shady stuff going on and you won't believe what i've found this entire situation is fraught with unethical business practices deception collusion and even fraud by the end of this video you will know exactly why this is happening who is causing it to happen and what needs to be done to stop it i really hope you enjoy now before we get into the specific details about how this entire racket works there are some concepts that i want you to be familiar with so that you can better understand the context the first is the difference between the intrinsic and extrinsic properties of an object and how they relate to perceived value intrinsic properties lie within the object itself for example if we were to examine a painting the intrinsic properties would be the materials it was made of and also of course how the painting actually looked the extrinsic properties would be the relationship the artwork had with everything else who it was painted by when it was painted the context in which it was painted and how sought after the pieces are all important qualities when it comes to perceived value it is the extrinsic qualities of a collectible that raises the cost significantly van gogh paintings often sell for tens of millions of dollars but if we were to program a robot to paint an identical piece it wouldn't be worth much more than the cost of the paint and the canvas ultimately both pieces would look the same on our wall but us weird and wacky humans like to care about the details that don't directly impact us we are even willing to spend millions of dollars more than we need to because of these details in the 17th century during the dutch golden age an event happened known as tulip mania where the price of tulip bulbs reached insane levels at the time tulip bulbs were a luxury item that were highly desired for their intense colors and as their popularity slowly increased over the years the price inevitably went up eventually people began noticing the trend of rising prices and started to speculate on the market speculating means buying a good not due to need but purely in the hopes that the price will increase so that you can sell it at a later date for profit with investors beginning to flood the tulip market this began a positive feedback loop driving prices up even more as the price increased faster not wanting to miss out on the opportunity even more people started buying in this caused the first recorded speculative bubble in history and there are two important things to know about these types of bubbles first no one buying actually wants tulips they just hope to make money and secondly this process is not sustainable and eventually people stop buying and the price crashes those left holding tulips lose everything as their value plummets back to normal i want you to remember this process because the exact same thing is happening with video games right now but the difference is that this current video game bubble isn't an accident you see if you know how speculative bubbles work you can theoretically create them at will all you would have to do is raise the perceived price of a good quick enough so that speculators see the trend and start entering the market then you can just sit back and let the positive feedback loop do the work profiting from your artificially created bubble by buying games early and selling later is rather obvious but there are actually smarter ways to make money ways that incur far less risk in the current video game market and the collectible market in general there are two institutions that stand to gain the most from increasing prices those are grading companies and auction houses a grading company is a business that inspects games certifies them and gives them a rating of quality they are basically quality assurance they allow buyers to know exactly what they are getting which enables quick and easy transactions in a bubble people are flocking to get their games graded in the hopes of profiting from the increasing prices but it's not just the extra business that helps grading companies as they also take a percentage of the market value when grading a game a game worth ten thousand dollars might cost around four hundred dollars to have graded but if that exact same game was valued at one million dollars it would cost over twenty thousand dollars to have graded it's a pretty good deal but the institution that really profits the most by far is auction houses take heritage auctions for example which is where all of the current record-breaking video game sales are taking place they charge a 20 percent buyer's premium on every sale so if you buy a video game for 1 million dollars you need to pay the auction house 200 000 on top and just for shits and giggles they also take five percent from the seller as well you can begin to see why grading companies and auction houses would really want prices to go up it's in their interest this is also why grading companies and auction houses should never be speculating on the price of goods or impacting markets directly they have a huge conflict of interest and whenever you see a grading company or an auction house talking about how valuable games are you know it's because they want to drive prices up again you'll need to keep all of this in mind i'm going to provide you with a ton of information and i'm going to trust you to connect the dots if you are really interested in learning what's going on i suggest writing down details as we go or watching sections more than once let's begin the two institutions that you will become very familiar with are water games the video game grading company and heritage auctions the auction house water games was founded in 2017 but it didn't officially launch until april of 2018. water games is the linchpin behind this entire bubble and the certification that water provides is the justification for why they are sold at such high prices interestingly water wasn't the first video game grading company to exist in fact the video game authority aka vga has been grading games since 2008 but the introduction of vga didn't cause a bubble like the introduction of what a games did and the reason is simple vga didn't manipulate the market or go out of their way to create a bubble the same can't be said for water however the president and ceo of water games is dennis khan and he is a key player the other important company heritage auctions was founded in 1976 by steve ivey and jim halperin steve ivey isn't very important to this story but jim on the other hand is critical heritage auctions are in the business of selling rare collectibles and memorabilia they sell coins comics art anything you can collect that has value and in 2019 they started selling video games but not just any video games only games that had been graded through water games the interesting thing about the relationship between water and heritage is that it seems to have existed before water even began grading games on the initial website of water when it launched it had a dealer spotlight section where it listed key relationships one was heritage auctions where it stated that water certified video games will be featured in heritage online auctions this doesn't make sense the entire point of certification is to guarantee authenticity and quality but a guarantee is worthless if you haven't established a history of accurate work why would heritage auctions a prestigious auction house agreed to sell games from a company that hadn't graded a single game why would they trust a business that hadn't even done any business to begin with when there was already an existing grading company that had been grading games for 10 years the only explanation to me is that heritage auctions was involved in some way in the creation of water games and knew that it was on board with their mutual goals and if you needed any further evidence of this pre-existing relationship jim halperin the founder of heritage auctions was listed on the water website as an advisor another business that water had a relationship upon creation was just press play a distributor of used video games which was founded by zac geig just press play also announced that it would be selling water certified games now in order to create a speculative bubble you need a way to spread information very quickly you need to draw in new eyes and make potential buyers aware that a market is building the easiest way to achieve this by far is to create headline-worthy events that can disseminate through the media in this case it was the purchase of a super mario brothers cart for 100 000 in february of 2019. before this sale the previous most expensive video game ever sold went for 30 thousand dollars so this new sale was a pretty big deal big enough to generate headlines but the even more interesting thing is who bought this game it was purchased by three men the first was jim halperin founder and chairman of heritage auctions the second was zac geig founder and owner of just press play the third was richard leche who has one of the largest video game collections on the planet heritage auctions then issued a press release about the sale because of course the purchase was never about collecting the game it was about publicity and if this wasn't obvious enough jim halperin advertised in this press release that the game may end up in a future auction dennis khan ceo of water games also chimed in stating quote water certified video games have been selling for record prices ever since heritage began auctioning them in january while many video games sell regularly for five figures breaking the six figure marks shows that the hobbies upward trajectory indicates no signs of slowing down so what you have here is the chairman of the auction house buying a game for a record price and then creating a press release about his own purchase in which himself and the president of the grading company are stating that the value of games is going up he then advertises that his own game will be going up for auction in the future through his own auction house and his plan worked the press immediately jumped on this and many articles about the purchase were written khan's tactic of pumping up the perceived value of games would be seen in every article for example in a kotaku article khan states i've always said video games are going to go the way of comics or cars or coins it's only a matter of time until a video game sells for a million dollars in an hour's technical article both khan and halperin were again pumping up the perceived value of games with halperin stating there are bets on what will someday be the first million dollar game and many collectors believe that this will be the one it's so strange to me that news articles allow the owner of a game to advertise that its worth is 10 times what they paid for and not a single eyebrow is raised they did everything they could to raise awareness about the sale they even took the cart onto porn stars claiming it was worth a million dollars this appearance was the perfect opportunity to establish water games as the authority in grading despite having only existed less than a tenth of the time that vga had porn stars even had dennis khan come on and again he pumped up the value implying that it was worth at least three times what they paid remember what i said about grading companies they shouldn't be manipulating the market and driving up prices dennis even faced backlash about this from intelligent collectors who knew what he was up to but of course this didn't stop him he went on porn stars multiple times valuing games at insane prices i can give you dozens of examples but the point is that there was a very large very effective campaign to establish water as the authority on video games despite having only been created it was critical that water was seen as the be-all and end-all in video game grading because then the words of its ceo dennis khan would be more effective in increasing the value of games kant would continue to abuse his authority as the head of water games for the next few years appearing in countless articles and interviews and always pumping up the price in fact he's still doing it even with the ridiculous price of 1.5 million dollars that the recent super mario 64 went for in july in a verge article covering the record breaking sale khan states i think that we are going to continue to see record-breaking sales again this is purely to make people believe the price will continue to go up in order to fuel speculation all of this press is driving up prices but it's only one half of the equation you also need people to actually buy games but the people buying these games aren't who you'd expect if you thought they were video game collectors hoping to complete their collection you'd be wrong let's take a look at who is really buying up these games video game collecting has taken an interesting turn in the past few years over the last decade or so i've been a big fan of watching collectors videos on youtube where they proudly show off what they've amassed in my experience genuine collectors love sharing their prized possessions but that's not what we're seeing with these record-breaking sales nowadays the buyers of these expensive games are hidden from the public identities are kept secret and no one takes credit for anything it's all really strange heritage auctions will never tell you who the buyers are or even if money was actually exchanged however there are ways we can tell who bought some of the games and this is where things get weird several weeks ago i was investigating the relationship between water games and porn stars given that the original appearance of water on that show was obvious collusion between the greeting company the auction house and the show in particular i was researching the appearance of a mike tyson's punch-out that dennis khan valued at eighty thousand dollars through a google search i found something very interesting it was a purchase agreement of the exact same cart the owner of the cart brian had sold it to a company for the exact same amount that dennis had valued it at the buyer was rse archive llc which trades as rally rally is a platform that allows investors to buy and sell equity shares in collectibles to put it simply people can buy a fraction of a video game and if the price goes up they can sell their slice to someone else in order to make a profit it's essentially gambling on the price of collectibles and it's as silly as it sounds none of the people who buy equity in any of these collectibles actually own it it's purely to try and make bets on the price and earn a quick buck the purchase agreement i found for the mike tyson's punch out was an sec filing companies that hold these items and sell equity in them need to disclose their assets to the sec so we can track exactly what they buy and how much for there are three fractional share companies that have sprung up in the past several years that are selling equity in video games mythic markets otis and rally each of them was formed immediately following the launch of water games through their sec filings i can track their purchases rally bought a super mario brothers for 140 000 in 2020. this was the same card that would eventually be sold for 2 million just this month from heritage they acquired this golden eye for 22 800 this grand theft auto for 13 200 and this donkey kong for thirty eight thousand four hundred mythic markets also bought this metroid for forty six thousand eight hundred otus also bought a mike tyson's punch out for 130 000 from heritage they bought a pokemon yellow for 78 grand this golf for 18 000 and many other private purchases aside from these fractional share companies we can also see people buying games from heritage and trying to flip them on ebay for example a super mario that was bought for 84 000 in september of 2020 is now sitting on ebay with an asking price of 1.5 million i haven't heard of a single legitimate collector buying any of these expensive games it's entirely speculation purely for profit but there have been attempts to fool the public into believing that actual collectors are buying these games and one of the biggest cheerleaders for this fake narrative is eric naiman in 2019 a slew of articles sprung up about a video game collecting dentist who bought a million dollars worth of video games the original article was posted by the washington post but if you know the real story this article is insane it describes eric nireman as one of the world's most avid video game collectors but in reality he had only been collecting for several months he began only in 2019 at the beginning of this bubble there are many people who have been collecting games their entire lives but this man comes along and he's instantly the most avid collector in the entire world the article claims that he bought the games but this is also not true he wasn't even using his own money the money was put up by a group of investors not by eric nireman the article becomes even more suspicious when dennis khan again rears his head to hype up the market heritage auctions also shows up advertising that the market is increasing eric makes his intentions clear by stating his opinion that video games should be selling for millions which of course would benefit him greatly after his purchase so why is the washington post and many other news outlets touting eric who only entered the video game market in 2019 as the forefront of collecting why is it falsely stating that he bought the games when it was actually an investment hedge fund why are water games and heritage auctions always there to give their opinion on the market it's because this is not news it's propaganda eric neyman is part of the small group of people at the very top building this bubble in an attempt to make money he is a talking head with one purpose to trick people into believing the video games he owns are worth millions which he will then sell he can be seen alongside people like dennis khan always attempting to inflate the market and this isn't a secret he admits his intentions freely of course that same week i discover on heritage auctions vintage video games which i never even knew existed and then when i like when it played through in my head i'm like oh my god this is like so much better than cards and my for me i mean also it's a new and emerging market like you guys are having an nfts it's that excitement of like wow if this even catches up a quarter of to where cards have gone you know we could we could see 100x returns just at the beginning you know because it was so new but as a as a collectible investment this was like everything that i was i saw on a mic trail card but like to the max on steroids and for me it was a time machine it was literally like if you if you could like i always said to myself i would look at like matt turner's collection on of of cards on instagram at that time and i was like wow if only i could go back 10 years and just like hang out with him and just buy everything he was buying and you know it's that time machine that everyone has you guys have with nfts it's always that if i could go back i could be a billionaire right so i said this is my moment that i'm gonna go back in time but it's gonna be today and i'm just gonna just go for it so we we set up we spent time we set up an llc we we we made a business plan um and i went to like just neighbors of mine family friends all like successful wealthy people we we spoke about all the risks and the benefits up front they knew it was speculative and i'm like listen but they all said the same thing they're like you seem super passionate about it if i lose 15 grand on you it's not the end of the world give it a run well to show even on heritage auctions ebay auctions look we already what we spent appreciated 20 to 30 percent this is working i'm gonna get out there and i'm gonna i'm gonna help make the market i'm gonna let people know about this i'm forming a market of around something that i feel that is severely underappreciated um so that's what i was doing my point is that it's not collectors that are buying any of these games it's purely people with a lot of money trying to scam other people out of theirs by manufacturing a bubble that otherwise shouldn't exist propaganda isn't their only weapon either it gets much worse we will now enter the wonderful world of shield bidding when it comes to auctions there is only one thing that will consistently drive up the sale price of goods and that one thing is competition obviously if there is only one bidder the price will never go up you are not going to bid more if you already have the top bid but if two or more people are juking it out that's where the price can really shoot up shield bidding is the act of placing fake bids in the attempt to raise the price usually this is done in collusion with the seller because the seller wants to make more money for the item they are selling so they will work with a third party who will keep placing fake bids up to an agreed price at which point they will concede and let the victim win the item but it isn't just sellers that have motive for this kind of practice the auction house itself has just as much to gain from inflated sale prices if your auction house sells goods at higher prices than your competitors people will want to sell their items through your auctions and this is where we come back to heritage auctions in 2008 a lawsuit was filed against heritage auctions for shield bidding it was filed by gary hendershot who was a former employee the lawsuit alleged that heritage used a shield bidder by the name of np gresham to drive up prices this lawsuit was ultimately settled out of court so you may or may not want to put any real stock in it but it is something to take notice of especially when jim halperin one of the defendants and if you remember one of the investors who bought the record-breaking super mario was caught lying in a sworn testimony he originally claimed that mp gresham didn't exist at all but later had to admit they in fact did if this lawsuit was the only claim of shield bidding i might be less inclined to believe it but the story doesn't end there while i was researching for this video i spoke at length with pat the nes punk who is one of the most dedicated collectors of nes games there has ever been he told me he was contacted by a comic book collector and seller whose father not only worked at heritage auctions but was also friends with jim halperin what he had to say was shocking and pat graciously connected us so we could talk the collector david wilson who founded and runs collector's comics told me this hi my name is david i'm from comic book investments on youtube my dad a big time comic book dealer in the 80s and 90s he ended up taking a job with heritage a couple years ago and he had a personal relationship with jim and they had a personal relationship for years and then through the relationship that's how he got a job working at heritage he was a comic book grader he worked for heritage for almost two years and during that time of heritage he had a few conversations with jim he told my dad told me because i would talk about the video games i was like hey dad i can't believe this video game sold for so much he was already gone by the time the video games have reached where they are at now and he told me he's like yeah so they're manipulating the market and my dad gave me an example jim is one of the biggest comic collectors in the world he has one of the biggest collections in the world just huge and what jim does and this is what my dad said he would take a comic book let's say he would take this book right he put in his collection and like three four years later he'd throw it up on heritage and then he would manipulate the price by bidding it up so say he bought the book for three grand forever ago he throws he throws in a heritage auction and then he bid it up to say like five grand six grand buy it from himself basically he bids it up and then he sticks it away back in his collection and then every couple years later three four five years later whatever makes its way back into the heritage auction does it again and what that does is it stimulates the market by pushing it up propping it up higher than it is to show like hey there's been a sale of this comic book or video game for this price so that means it must be worth that much and that's i that's kind of like what i'm feeling that they're doing with video games they're propping them up like super high higher than they should be to create a market manipulate the market into thinking that these video games are actually worth this much because they have sales data to prove it if this is true and everything i currently know about jim halperin leads me to believe it probably is the tactic definitely works when items are sold at higher prices it raises the perceived value of every similar item it's even more effective if you purchase items at record prices every time a video game sells higher than ever before the internet is flooded with articles advertising your auction house for over two years all we ever heard about was all of the insane prices that games were going for on heritage auctions naturally this makes people want to sell their games through heritage as opposed to anywhere else but with all of the reports of shield bidding reports of buying their own items and the intense secrecy of purchases we don't know if heritage were involved in any of these record-breaking sales this is why we also can't be sure of the recent two million dollar purchase from rally as again the ridiculous price the secrecy and the obvious motive make it very suspicious jim halperin isn't the only major player that seems to be using his own platform to personally benefit it's time to take a closer look at what are games and how some of the key figures in that business are using their positions for their own gain shield bidding and buying your own items at inflated prices are pretty obvious ways to abuse your position at an auction house but how could you take advantage of your own grading company the first thing that comes to mind would be grading your own games this presents a pretty clear conflict of interest and even water admits this in a new york times article what a president dennis khan goes on record to say that water employees are not allowed to have games graded by the company or sell those that were i'll say that again water employees are not allowed to have games graded by the company or sell those that were this makes sense and i applaud that rule if it's actually upheld now let's take a look at a transaction that occurred in 2019 between two gentlemen the first is dane anderson dane is the founder of nintendo age which hosted the largest community of retro video game collectors and enthusiasts on the internet it also contained the most valuable database of information concerning retro games and what they were worth if you wanted to know anything about collecting this would be your first place to go dane was also well known for his video game collection and he had one of the largest assortments of sealed nintendo games on the planet but in 2019 he sold his entire collection to a gentleman by the name of jeff meyer who is the founder and ceo of go collect which is a price guide for comic books the purchase of dain's collection by jeff was a pretty big deal one of the biggest in history it was so noteworthy that watergames even gave the collection a special name it was called the carolina collection because both men hailed from carolina jeff submitted the games to water who graded them all and as part of that grading inserted the name of the collection they were a part of and you can see this name on the label of the graded games jeff then immediately took the newly graded games and started flipping them through auction houses most notably heritage auctions where the first auction alone produced a total return of over half a million dollars so why am i telling you this well it's because jeff meyer is a director of water games you won't find this information publicly because they keep it a secret but thankfully the company's sec filings tell us everything we need to know according to their own filings jeff meyer is a director of the company so what you have is the president of water games saying that employees are not allowed to grade or sell graded games but meanwhile a director of the company is grading his entire collection but not just grading it grading it in a special privileged way by naming it therefore increasing the value and immediately selling them through auction houses at insane prices for profit if the games in this collection were graded just like any other game there would be nothing illegal about this however considering the fact that they were graded in a unique and special way there is a very good argument to be made here for fraud especially given that jeff's relationship with water games was never disclosed to the public but it gets even worse jeff meyer also purchased nintendo age which as i mentioned was the most valuable database for retro video games jeff immediately shut it down he also purchased the website game value now which is a price guide for video game sales now i'm not a conspiracy theorist but on the surface it appears as though jeff is trying to own and control the flow of information about the value of video games which only ends up being more suspicious given his ties to water games again another huge conflict of interest jeff has never publicly admitted to being a part of water games and the way he talks about his relationship with water makes it seem like that's intentional for example in a blog post he wrote himself about his upcoming video game price guide jeff states thanks to the great relationships with the awesome folks at water games he is talking in the third person about a company that he is a director of the cherry on top of all of this is that when water games was incorporated in 2017 dane anderson was the executive officer so this entire deal happened between two men that were or are directly involved with the company dennis khan obviously knows who the directors of his company are so it really makes you think when he blogs about the carolina collection on the water games website but fails to disclose that the purchaser of the collection is a director and it forces you to think even harder when you realize that at the very same time he is telling the new york times that employees cannot grade or sell water graded games there is a good reason why grading your own games is a big conflict of interest as the grade is extremely relevant when it comes to how much a game can be sold for the higher the grade the more valuable a game will be there is no better example than the recent sale of super mario 64 for 1.5 million on heritage auctions its grade was a 9.8 with an a plus plus for the seal it's essentially the highest grading a game could ever hope to achieve on the same day another super mario 64 was auctioned with an 8.5 rating that sold for only 31 thousand dollars that's an increase of 5 000 for a slightly higher grading this raises another interesting question how reliable are these ratings if you are going to spend an extra 1.5 million dollars for a high rating you'd want to be pretty damn sure that the rating is accurate grading companies attempt to make their grading process as objective as possible but the truth is that they are very subjective by nature at the end of the day the grading is given by a human based on their own perception of the game's quality and history has shown that this perception can vary wildly from person to person grading companies have been known to give very different grades for the exact same item and this has led to a practice called re-grading if someone receives a grade for an item that they believe is not high enough they will simply take it out of the case and send it back you have a lot of people playing what i call the crack out game meaning they get a comic book back and it comes back cgc 9.6 they think it should be a 9.8 so they crack that baby open and they keep sending it back to cgc hoping that at some point that grader is either going to slip up or that grader is going to get that book and go hey you know what this is a 9.8 they're going to slap 9.8 on it and they're going to send it back to that submitter and that submitter is going to be very happy because in the overall marketplace for certain books you go from a 9.6 to a 9.8 you just made a large chunk of money the average collector the average speculator and the average investor out there is over valuing a lot of these items based on the grade not realizing that in certain instances the grade is arbitrary it is an estimation it is not an exact science but you don't even need to regrade games in order to see the blatant inconsistency on display with what are graded games last month a tomb raider for the sega saturn was sold for 12 000 through heritage auctions it had a rating of nine point eight with an a plus for the seal but it's immediately obvious that this grading makes no sense the seal has multiple very large holes which according to the grading system on what his own website is not allowed for a plus seals which must contain no holes the seal also has countless smaller holes scratches and stains quite frankly it looks disgusting and yet it gets an a plus i've seen seals with b grades that are better quality than this my point is that video game grading is not a science and the ratings given to games are not an exact representation of the game's quality and yet the rating is touted as the sole justification for why people are spending an extra million dollars on some of these games now you understand why it is so important to establish water as the utmost authority on video games because it makes their ratings all the more valuable now one final thing before we move on if you knew you were about to create a bubble surrounding sealed video games what would you do personally i would start buying as many sealed video games as i could this is mark haspel one of the founders of water games and the current chief advisor he has been involved in the comic book collecting scene for decades but was never active in video game collecting but right around the time that water was formed he suddenly started showing up at video game conventions buying as many sealed games as he could not only that but he would actively seek out and inquire about sealed nes games more specifically the popular ones such as mario metroid mega man castlevania and zelda the kind of games we see being sold now for record prices and remember this was several years ago his taste in video games seemed to align perfectly with the same games that would bring the most profit several years later one collector stated mark haspel was buying sealed six packs from a good friend of mine a year before water started grading games pat the nes punk also noticed haspel collecting games at conventions in june 2019 i was a guest at a gaming convention the weekend of the event i noticed a small group of individuals who were hurriedly acquiring sealed and complete inbox games from vendors at one point i witnessed an individual who i later learned to be mark haspel returning to the water expo booth while holding a stack of nes games i did find it a little strange but was unaware of any affiliation that person may have had with wada so i didn't think much of it at the time it's obviously not illegal for the founders of water games to collect video games and it's impossible to prove intent but these examples just strengthened my opinion that they knew what was about to happen and they were preparing for it now before we get to the conclusion i want to teach you about an event in history that might be relevant to what's happening right now the great coin collecting bubble of the 80s believe it or not this kind of crazy bubble surrounding a collectible has been seen before not to this extent but still this isn't a new thing in the 80s it wasn't video games it was coins pcgs is the world leader in coin grading and on its website it tracks something called the pcgs 3000 index it's an index of the value of coins similar to something like the dow jones in the historical chart you can see a massive spike occurring in the late 80s after crashing the price has still not recovered to level scene 30 years ago and this is without even considering inflation so what caused this bubble well according to an article posted on antiquesage.com it was the development of slabbing and the introduction of third-party certification slabbing is where a grading company will take a coin encase it in plastic and give it a rating two grading companies were formed around this time pcgs and ngc the article goes on to state that the arrival of pcgs and ngc changed the industry nearly overnight now dealers collectors and investors could buy or sell slabbed coins sight unseen because they all trusted the grades given by the major grading services if you're beginning to get a sense of deja vu that's completely understandable this is literally the exact same thing that's currently happening with video games the fact that people could easily and confidently purchase graded coins meant that they began to sell more and more this led to the price going up investors began to take notice and more importantly even investment hedge funds got involved kidder peabody and co merrill lynch and ubs all created coin hedge funds where they took in money from investors to invest in coins this expanded the bubble even further but the thing about speculative bubbles is that they always burst the price cannot go up forever and at the slightest tenth at the peak has been reached everyone sells the ironic thing you need to remember is that people who buy collectibles in order to make money never actually intend to collect or keep them so when the price starts to drop everyone attempts to liquidate their assets as quickly as possible in order to not lose money the market becomes flooded but because no one is buying the price gets destroyed in the end it's the suckers that came in late that lose their money the bursting of the 80s coin bubble was a big deal and hedge funds were inundated with lawsuits from people who had lost their investments merrill lynch ended up paying back over 20 million dollars to their investors the ftc even stepped in to investigate what happened and this is where things get juicy in the antiques age article i referenced it said that pcgs and ngc were the first third party coin grading companies but this is actually false the first third party coin grading company was nci numismatic certification institute which was founded in 1984. after an investigation the ftc ruled that nci misled customers about the value of coins i want to read from an la times article written in 1989 and i want you to appreciate how amazingly relevant it is today despite being 32 years old the article reads by and large it's grading and rarity that determine the value of a coin rarity is easy enough to establish grading is often a matter of opinion it's for this reason that grading services came into being their purpose is to give an impartial rating to a coin which virtually establishes a particular price but what happens if the grading service misrepresents the grade of a coin thereby increasing its value that's the situation described by bill mcallister of the washington post in regards to a recent decision by the federal trade commission the commission determined that overgrading coins was a deceptive and unfair act prohibited by the 1914 law that created the ftc charged with this practice were two texas-based corporations heritage capital corp and numismatic certification institute also named in the action was steve ivy and james halperin prominent numismatic figures a consent order was signed agreeing to establish a 1.2 million dollar fund for collectors who purchased the nci graded coins from coin galleries incorporated of miami heritage halperin those names sound familiar yes it's heritage auctions and jim halperin in the 80s they were found guilty of illegally misleading customers about the value of coins and fined 1.2 million dollars from the 1989 ftc annual report it states numismatic certification institute and its principal steve ivy and james halperin agreed to settle charges that its representations and failures to disclose information misled customers to the value of coins certified by the company an affiliate heritage capital corporation also agreed to settle charges that it provided substantial assistance to a coin retailer certified rare coin galleries knowing that crcg was misrepresenting the security and profit potential of its coins to investors under the settlement defendants agreed to a permanent injunction and heritage and nci agreed to contribute 1.2 million into a consumer redress plan for crcg's customers another interesting thing about jim is that in 1985 he wrote a book called how to grade us coins upon which the grading standards of the two leading third-party grading services pcgs and ngc were ultimately based again these are the two grading companies that antiques age cited as the most important factors in the coin bubble there is a very strong case to be made that jim halperin is the single most responsible person for the coin bubble of the 80s i'm not a conspiracy theorist but it kind of looks like he's doing exactly the same thing again 40 years later but this time in video games as i've said before it's impossible to prove intent but one thing you can certainly disprove is ignorance jim halperin was extremely caught up in the 80s coin bubble and was so responsible that he was fined over a million dollars you don't forget something like that he knows exactly how bubbles are formed he's seen them before which is why he would know exactly how to create them again remember jim halperin bought the super mario brothers cart that sparked this entire game bubble he is an advisor to water games and according to rumors also an investor in the company he is the founder of the auction house that these games have been selling on for record prices it's too convenient that this one person is involved in every single piece of the puzzle when he has the kind of history that he has this doesn't seem like a coincidence to me [Music] the retro video game bubble cannot go on forever at some point it will burst the question is when there are a couple of scenarios that might make this happen sooner rather than later the first is the release of population reports in collecting one of the things that drives up the price of an item is rarity in every other realm of collecting grading companies produce what are called population reports these reports tell you exactly how many of any particular item have been graded by the company along with their rating so if i do a search for action comics number one through cgc a comic book grader i can find out exactly how many are out there and at what rating population reports are standard practice because they allow people to judge the rarity of an item accurately and fairly before making purchases but surprise surprise water games keeps this information hidden from the public and refuses to let anyone know how many games of each type have been graded so we really have no idea how many of each game are out there when more games of the same kind become known prices plummet it has already started happening with some games the best example is spider-man for the atari 2600 in may of 2020 the first sealed spider-man was listed on heritage auctions it was a 9.8 a plus plus the best rating you can get it was mint condition and it's such an old game that it's surely rare it sold for 9 000 which in 2020 was actually still a decent amount of money to spend on a video game but the funny thing about spider-man for the atari 2600 is that it's not rare it's not rare at all even in mint condition after this sale heritage was flooded with 9.8 a plus plus spidermans and when i say flooded i really do mean flooded with each sale the price diminished in april of 2021 a 9.8 a plus plus sold for 870 that's a decrease of over 90 percent in less than a single year when people realize how common some of these games are prices will be destroyed and that's what water games and heritage auctions are afraid of legitimate collectors have been complaining for the past two years but unfortunately none of them have substantial audiences and they are essentially powerless against the forces that are driving this bubble if you want to help make a positive change you can send water game some feedback by email letting them know how appreciated it would be if they let us know how many graded games are out there the release of population reports would be a good start but water games and heritage auctions also need to stop manipulating the market with their propaganda journalists don't even bother asking real collectors what they think about what's happening they simply get sound bites from water and heritage and allow them to inflate the bubble with hype despite the obvious conflict of interest i asked a couple of lifetime collectors what they think should happen and this is what they had to say my name is pat contree i'm a youtuber podcaster but also a long time video game collector since the late 90s i've seen a lot of things in the game collecting world but what's happening right now with the graded sealed games market is something i could never ever imagine and it's a shame that the video game collecting hobby that i've been a part of for decades and many others including sellers as well people that have helped grow this hobby of ours with passion with knowledge doing research putting in the time and effort this is the end result the unfortunate end result is that this hobby that we all love has been perverted it's been twisted to the ends of a small group of people to line their pockets these are rich people getting richer and they've stepped on and stepped over all the video game collectors all the people that have sold the games run video game shops all the people on forums researching this illustrious uh and beautiful past history of video games they've all been used we've all been used now for the select few individuals to get richer and it's a crying shame it's probably too late unfortunately but in a perfect world there should be full transparency and accountability when it comes to these video games we should know if someone who helps run the auction house is involved in the buying and selling of the games that are being auctioned we should know if the people grading the games are buying and selling these games themselves it's unethical if they are doing so and we should know that so we can stamp out bad behavior now how can this be avoided well it's quite simple if wada would release and update population reports for all these items that they're grading on a regular basis this would not be a problem going forward guys this is a problem due to the fact that there is a lack of ethics and a lack of transparency in these markets collectors deserve better you guys out there that want this to be a thing rather than thinking from the standpoint that you're gonna make money over the long term in this market what you should be doing is demanding better from grading companies from auction companies from other players in the trade you should be demanding ethics and transparency this bubble isn't just affecting sealed video games at the highest price points the selling point of every single game has increased dramatically over the past two years even for non-sealed games aspiring video game collectors who legitimately want to build their collections will get screwed because the hobby would become too expensive to be viable what's worse is that people are using the record sale prices in order to scam people you can find cart only super mario 64s for hundreds or even thousands of dollars on ebay when they are only worth 10 bucks people with a lot of money and power have taken over collecting and their thirst for money means we will all suffer as someone who does care deeply about gaming it honestly sickens me that these people have turned these cherished possessions into a means to gamble and speculate and i hope this ridiculous practice of trying to extract profit from the suckers who buy the hype will end sooner rather than later as a sign of appreciation it would be amazing if you could go and subscribe to a couple of real collectors that helped me learn more about this go check out pat the nes punk and also sean from reserved investments these two gentlemen have been collecting for most of their lives and we need more people like this who are not only passionate but are willing to tell the truth about what's happening also check out david wilson's channel as it really took some balls to be willing to let me know what he had heard you can find the links to these channels in the description hopefully you have learned something about how those in power can create speculative bubbles next time you see them trying to do it make sure you call it out and let them know that we won't tolerate it as always thank you so much for watching you legends i hope you are having a fantastic day and i will see you in the next video

Channel: Karl Jobst

Views: 1,682,402

Keywords: retro video games, pat the nes punk, heritage auctions, wata games, jim halperin, super mario, super mario bros, super mario 64, video game bubble, video game auction, auction house

Id: rvLFEh7V18A

Length: 52min 22sec (3142 seconds)

Published: Mon Aug 23 2021

Reddit Comments

[u/Do_It_USSR]

Damn so they went so far as to get a guy on Pawn Stars on several occasions just to pump up their reputation lol. Interesting to see such in-depth investigation/summary of the situation after all those articles a while ago about the sale, even though of course there were already loads of comments at that time about this being a scam and such.

[u/[deleted]]

[removed]

[u/Clbull]

Considering the fact that Jobst has been one of several content creators hit with frivolous defamation lawsuits from Billy Mitchell, I worry what's going to happen if he pisses off a big org like WATA and Heritage by calling them fraudsters.

On an unrelated note, wasn't expecting to see a clip of MaximusBlack in this vid. I miss his SC2 commentary...

[u/CO_Fimbulvetr]

Speculative investment is a severe problem for many hobbies, and pretty much all collecting ones. It's easily abused and only serves to push out genuine hobbyists. This is just an extreme example.

It's also a problem with trading card games like Pokemon and Yu-gi-oh right now, particularly in the last two years - although I haven't seen any fraud conspiracies on this scale over there yet.

[u/penpen35]

Listening to the Bombcast when the records broke and Jeff Gertsmann was really skeptical of the prices these garnered. He pretty much straight out said it's something shady and some sort of internal deal might be in play here.

[u/S-J-S]

Absolutely insane. This is some of the most important investigative journalism done in video games. Karl was one of the best YouTubers for gaming as-is, and this solidifies his importance in an unprecedented way.

[u/BCProgramming]

Goes back farther. He mentioned VGA, but doesn't dig into them much. this write up does. They aren't much better. A lot of the same stuff happened there, and particularly with the other companies under the same umbrella, like AFA. (Action Figures). There is similar Media exposure of high-price sales with "Quotes" where they suggest that it could probably sell for more.

Though, that write up has a few weirdities of it's own too.

[u/wisp-of-the-will]

This was a really great watch; it heavily goes into satisfying detail about the shadiness surrounding the current video game collecting market and how all the major players are pumping money for themselves. The NintendoAge and GoCollect transaction is particularly damning, and I'm surprised they haven't gotten more scrutiny over that deal when both parties are pretty much directly connected to WATA Games.

[u/Adriantbh]

Shouldn't these guys be in prison for this? Isn't this type of fraud illegal?