Let's face it, people online can be assholes. Not all, but a good chunk, and the audience and anonymity of the internet can turn even the most regal individual into an absolutely vile troll. When developing GTA Online, Rockstar knew that the assholes will inevitably find their way into the game (considering the massive sales, this is no surprise), and have devised a way which allows the non-asshole people to enjoy the game without having to deal with the assholes.
Basically, if you're an asshole in GTA Online, then the game tells you "you're an asshole" and puts you in a lobby exclusively with other assholes. Of course, since the player is a valued customer, and brand loyalty must be upheld, Rockstar opted to use the nomenclature of "Bad Sport" as opposed to going out there and calling it what it is.
If you destroy other player's private vehicles, you're an asshole. If you kill other players unprovoked, you're an asshole. If you quit a mission early, you're an asshole!
Other players can also label you as an asshole thanks to the community report system. Unfortunately, people who exploit this feature (assholes) are not detected automatically.
However, with the GTA Online Freemode Events update, Rockstar is catering to the assholes (we kid). Certain game modes introduced in GTA Online 1.29 require people to do things that would usually label them as assholes — killing, destroying — in order to succeed, and therefore, in these cases, they may do so without fear of being prosecuted. The following list of missions and activities will no longer be covered by Bad Sport or insurance penalties:
Looks like Freemode Events made GTA Online a much more dangerous place, don't you agree?
