LoL has a peak daily player count north of 13M. Its one of the most played games in the world. There’s clearly a tolerance for intolerence in the setting - even an adoption of it, as younger players internalize the slurs as appropriate behavior. That’s why you see it everywhere. People with foul mouths aren’t attracted to LoL. The existing base (which was trained to be shit when they joined) degrades the newest members in turn.
You see the same in games like Roblox and Call of Duty. Without any meaningful admin or internal censorship, the bad actors run rampant and the new players are trained to accept (and then imitate) the miserable attitudes.
There’s definitely selection bias (LoL loses some number of players on its deplorable culture). But overall, they’ve been growing their userbase year over year. That’s a big reason they don’t seem to give a shit about their reputation. It doesn’t seem to cost them much.
Lots of social media and big market gaming has this problem of 4chan-ification. Costs way more to police than you can earn from policing, unless there’s state regulation (akin to the FCC) on what you’re distributing.