Right. Sorry, but I can't write a whole treatise explaining all of these things. And keep in mind this refers only to sexual material on the borders of obscenity (strip club regulations). The worst of video game material is more like an R-rated (or NC-17, if you will) movie.
""that the people, not the government, in the marketplace of ideas, decide what speech is valued and what isn't."
"Via their elected officals."
No. The marketplace of ideas concept is considered beyond the realm of political control. It's basic First amendment philosophy that some rights cannot be touched by majoritarian decisionmaking. If that were the case, things like KKK/Nazi rallies/flag-burning could've easily have been banned by elected officials, since these ideas are generally unpopular with the public. They are legal activities because the First amendment, even the kinds everybody hates, can't be touched by elected officials.
"No, the spirit of the law doesn't protect:
1) Hate Speech \ Slander \ Libel \ Obscenity.
2) Yelling fire in a crowded theatre.
3) Inciting a riot.
4) Calling for the murder of someone."
I mentioned all of that at the bottom of my post. And you're incorrect on the first one - hate speech is (usually) protected. See Collins v. Smith, RAV v. St. Paul.
"What law are you refering to? There is no law. Only a voluntary ratings system.
The only "regulation" proposed here is directed towards minors who do not have adult rights to begin with."
Uh, the law everybody's posting about here. Which got struck down the other day. The ESRB system is directly not at issue here. The Illinois was content specific regulation via sexual activity and violence.
"This has nothing to do with the First Amendment, there is no censorship here.
This has to do with billion dollar companies (read lobby group) losing out on a large portion of their market."
The fact that a large corporate industry is involved doesn't make the First amendment interests any less important. Nor does there have to be direct censorship. As I said before, laws that regulate protected free speech material specifically by content (even "offensive" content like violence and sexual material) get strict scrutiny and cannot survive without a compelling state interest. Illinois had a compelling state interest, but if you read the opinion, the judge ruled they couldn't back it up accurately with good evidence. The law was also considered vague, the definitions of human-to-human violence, sexual content, and its potential conflicts with ESRB, would result in confusion among store owners. Vague laws are usually struck down because it's unclear what conduct is affected by the law, resulting in self-censorship and a chilling effect on free speech.
""Video games (as they are largely made today) don't fit the above categories."
"That is your opinion.
Some people consider violence and explicit sexual content to be obscene; both of which appear in games."
That's more your opinion. No video game has ever been declared to be legally obscene in America. You may think extreme violence or what probably amounts to softcore, R-rated type sexual material (which is really as far video games have gone in terms of sexual content) qualifies as legally obscene, but I don't think any court in America has ever gone that far.
Again, they don't have to directly censor, specifically ban material in order for it to be a First amendment problem. Laws regulating content of protected speech are shut down if the state can't demonstrate a compelling state interest why they should remain.