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@jacklaridian @tintenteufel
It would depend, for me, how much that discriminates them. When everyone can use magic but the dwarves... also how marginalised the dwarves are in general. Most dwarves are okay, I believe. If you'd be of the opinion gygax treated the goblins poorly, however.
It's fantasy racism, but I wouldn't go so far as to say it's victimless and therefore okay.