@K3Tuning I believe the problem is when you drop back a bit farther because of whatever reason, it is far more difficult to have clean races.
If you are S sportsmanship rating you have a cushion of 20 points. if you are B it is 10. I'd imagine always racing in the S lobby there is minimal contact and you can actually play the game in most cases. Easy to stay in that 20 point window even if you do encounter the occasional incident.
New drivers are EB. 5 races or so earns you D driver rating. When you are a B rating or even a lower A, you start getting matched with the "new drivers" very regularly. Most incidents you receive a sportsmanship reduction for contact even if you did not initiate it so it's near impossible to run a clean race. When you don't qualify to start in the rear of the field and try to work up they block / ram or whatever it takes to keep you behind them. If they do let you pass, it's normally because they want to dive bomb you in the next corner to take you out. Granted there are some new on the track and you just wait for a few turns for them to leave the track on their own. Passing is near impossible on a lot of tracks so you lose DR for finishing toward the back of the pack, on top of losing the SR. Doesn't take long to get matched with more of them because your DR drops even if you are gaining back SR. Then, if you qualify and start up front, you have corner X that you are being punted from behind so you still have to try to work through the field AND it causes SR reduction because - who knows. There are few races I will run because of the problems.
Yes it's a video game, but I guess my point is if they are going to promote this as a real driving experience they should take the idiots out of the mix. I would guess it's near impossible to have a fool proof penalty or matching system no matter how much you tweak it. Easiest solution is give them their own "dirty" lobby. That would probably get rid of half the problem.
I still like the second lobby idea though, when I choose "Race A" I go to another screen asking me if I want Race 1A with no damage or Race 2A with heavy damage, or simply have both selections on the first screen. Leave the latter locked for new drivers. After you reach - enter whatever achievement here - the second selection becomes available. They already do this with the "Top 24" in Sport mode, and in the Driving School section also. Driving school would be a great way to earn the right to race with damage. The coding needed to make that happen should be minimal, and not many are going to spend an hour or whatever in driving school every time a new account is created just to enter a few races before being kicked again.