Over the course of the '90s, Sega and Nintendo were obviously direct competitors - we've seen this documented in texts like the 'Console Wars' by Blake J. Harris. Despite this, it seems there was some rather incredibly weird stuff going on behind the scenes at one of these video game companies - so weird actually, that it was "borrowing" its rival's mascots...
Sega, in particular, apparently had a thing for Luigi from Nintendo's Super Mario series. It all stems from a recently discovered prototype of the Dreamcast title Sega GT, which is part of "Project Deluge" from The Hidden Palace. It includes 135 Dreamcast prototypes and 349 Xbox OG prototypes ranging from unreleased games, unreleased ports, tech demos, early builds, localisation prototypes, debug builds and more.
In the prototype of Sega GT - a build that has never been accessible to fans until now, a model of Luigi has apparently been discovered in a secret race within the game - posing as the starter with a flag. If that's not already got you wondering what's going on here, there's also a funny-looking map, and the race is titled "sonygt2" - likely a reference to the 1999 PlayStation title Gran Turismo 2, which was released just a few months before Sega's own sim racer.
Nobody is really sure what to make of this at the time of writing, as Luigi is (and always has been) Nintendo's intellectual property. It's likely some sort of joke or perhaps he was even a placeholder - but it's certainly there and we're guessing this was never intended to be shown outside the walls of Sega.
Sega GT was co-developed by Wow Entertainment (Sega AM1) and TOSE - known for its close ties with Nintendo platforms since the '80s. TOSE is also behind series like Game & Watch Gallery and The Legendary Starfy, and more recently some Nintendo-published Switch titles - so perhaps it had something to do with this odd inclusion of Luigi in Sega GT's prototype.
So, there you have it - Luigi is real and it turns out he's been hiding away inside Sega GT on the Dreamcast all along.