Dilemma of Niantic: Banning Paying Spoofers or not

There is no need for a dilemma. They could have use many degrees from soft to hard ban.
5 Minutes Ban,
1 Hour Ban,
1 Day Ban
1 Week Ban
1 Month Ban
permanent Ban.

They could take out all pokemon of the gyms, when a spoofer with a Weekly or Monthly ban. There should be a clear notice, why he is accused, and which step of punishment is active.

Other possibilities: regional restriction of an account, or forbid to be active in gym....

They can do many things to warn a player. Permanent ban should be the last resort.

Interesting question, but I find your supposition flawed. In the vast number of cases a spoofer is able to hold ~10 gyms a day, use the infinite for hatching (plus bought incubators), spoof to find anything that is in 10K eggs, and will NEVER buy a lure or incense. The wise ones also probably have a legit account on the side, and are concerned about putting money into an account that may be sitting on a list for the next ban wave.

Niantic isn't great at listening, but I imagine they are hearing the calls that spoofing is ruining the game for your average player, which is their true income base.

Most of us have to pay because we don't cheat - I rarely keep more than 1 or 2 defenders in a gym, so to buy more incubators (and other stuff sometimes) I have to buy coins.

Spoofers can collect 100 coins a day... so wrong... Ban them all (even if they spent some cash, perhaps before they started cheating). It's the risk they take.

The problem is... theres not really a 100% acurate way to detect spoofers, unless they are stupid, or they spoofing app is crap, at least with the current technology. The risk of banning legit players with conection problems is too big for them.

From an economic perspective, forget what the spoofer himself spends, what happends if you start banning people is, if they decide to stop playing... some of their friends will probably stop playing too, and they migth or migth not be spoofers themselves. Yes in an ideal world they would ban all spoofers, but things are not as simple as some of you want to make them look like

They should ban them because in that case Niantic won't be able to find sponsors. How can you expect Starbucks to pay you when half the time Starbucks Pokestops are spinned from home and not at a Starbucks table enjoying the Pokemon coffee? :P

There is a simple solution to this problem: Divide players into spoofers and non-spoofers, and let each group have their own version of the gyms. So the spoofers can battle other spoofers, and the honest players never see any of them just as if they wouldn't exist.

I played Pokemon over a 1 1/2 year ago. I noticed I doubled the millage on my car; I doubled my monthly gas purchase, I also increased the replacement on my brake pads and tires on my car.

Pokemon grounders are adding tires, brake pads, and other stuff to land fills at a faster rate than spoofers. I decided to spoof to save on car expenses and to be more of a green player.