I wouldn't be surprised if Nike sent a cease-and-desist letter in response to its name appearing in a video game, but that doesn't actually mean anyone's done anything wrong; it just means that Nike is policing its trademark to avoid losing trademark protection.
There's an eight-part test for trademark infringement, but I don't think you really need to get into it because -- as MSalters said -- a video game is in a totally different market.
But I disagree with MSalters on the second point, because using the name in an expressive medium such as a video game is probably protected under the First Amendment -- even if I made a game that was about the actual shoe company, featuring members of the C-Suite and prominently displaying the Swoosh and other logos all over the place.
The basic rule for First Amendment protection in this area comes from Rogers v. Grimaldi, 875 F.2d 994, 999 (2d Cir. 1989) and its progeny, which hold that expressive uses of commercial identifiers such as trademarks are generally permissible unless the use "has no artistic relevance to the underlying work whatsoever," or it "explicitly misleads as to the source or the content of the work."
There are quite a few cases cases touching on this that could be worth a read:
- Mil-Spec Monkey, Inc. v. Activision Blizzard, Inc., 74 F. Supp. 3d 1134 (N.D. Cal. 2014) (permitting video game's unlicensed use of trademark where it had an expressive purpose and defendant never claimed to have trademark holder's endorsement);
- Twentieth Century Fox Television v. Empire Distribution, Inc., 875 F.3d 1192 (9th Cir. 2017) (permitting use of potentially confusing mark where it had some artistic relevance and was not explicitly misleading);
- Brown v. Elec. Arts, Inc., 724 F.3d 1235 (9th Cir. 2013) (permitting use of NFL player's likeness in video game where it was artistically relevant and not explicitly misleading);
- E.S.S. Entm't 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008) (allowing allegedly confusing name in video game where it was not explicitly misleading and therefore protected by the First Amendment)