And that’s pretty much the same thing Nintendo’s doing here. Emulators are legal; mods of this nature are generally legal; hell, streaming games even without authorization is an open legal question AFAIK, and could potentially fall under Fair Use if it ever came to trial. Nintendo and the organizers both know all this.
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They also both know that Nintendo will throw unlimited money at lawyers to win this case–or at least financially devastate the organizers and everyone associated with them–and that the platforms involved (Twitch etc.) won’t risk a lawsuit or jeopardizing their commercial relationships, so Nintendo wins regardless of the laws or the merits of the case.