Am I missing something here?

Yes, you are. You’re missing the fact that the game states that players will be paid out in STEEM. It was billed as “play and win STEEM,” not “play and win worthless shittokens that we haven’t created yet.”

So, users spent their STEEM to upgrade their accounts so that they would have a chance of earning more STEEM in return. But as it turns out, the game developers decided to not honor that. Instead, they are keeping much of that STEEM.

They have advertised a game that pays you in a specific currency, then, after many thousands of dollars in that currency was used on the game with the hope of earning that currency back, they are switching payouts to a different non-existent and/or worthless currency. It’s textbook marketing fraud and it’s prosecutable in most legal jurisdictions.

So yes...very scammy, indeed.