My perception of the psychology is a malformed competitive drive. Competition is fun! But when it gets someone to the place of "Must win at all costs" it can be life-destroying. For the video game cheats, I think it starts out as "Must beat the other players", but then that gets (mostly) boring once they are actually are beating the other players, and it shifts to "Must beat the anti-cheat system."
I think you, and a lot of other people really overestimate the number of people for whom the technical challenge is why they cheat.
Seeing that the cheating industry is relatively large, and functions on a subscription basis; For the vast majority of cheaters the challenge is entering their credit card to get their cheat subscription.
These are people who want to win at all costs, other users be damned.
A bit, sometimes, maybe, for some. The only person you really need to compete with is your past you. The rest... it certainly leads to less happy life, unless you keep winning way more often than the rest.
And uncontrolled, it can very easily spiral into rather destructive personality patterns over time. Parents often fuck up their kids having them compete as much as possible, laying seeds for later issues. Competitive people always compare themselves to others, never happy with what they have, regardless of how much they achieved. Literal opposite of searching for happiness in life.
I don't know about your peers but I see this behavior often in high performance environment, high achievers with sad inner lives.
