Since the holidays are approaching again: I have a brother who will give some nieces and nephews gifts in front of those he is currently trying to snub. The nieces and nephews are as young as 2 and up to 20-plus.
It's not as if money is an issue, or not having time to give gifts to those he wishes before the rest of the family arrives. He does this deliberately.
We are all past the stage of doing anything to change his obnoxious behavior, but what should be the reactions of the parents? In the past, if my children received gifts in front of those who didn't, we politely refused them.
This brother is an obnoxious, racist boor, yet one sister and brother insist on inviting him.
Sometimes he has made a point of inviting them all out to "help" him at his car, and then giving gifts to just a couple of kids while asking the others, "What do you think of that? Pretty nice huh?"
When someone's bad behavior is that cartoonish, that jaw-dropping, that hard for even your more typical vindictive person to comprehend, the bad actor stops being the main problem. The people who allow it to happen, year after year, to children as young as 2, become the real story.
You're asking me a question you have already answered: The way the parents "should" react is to refuse the gifts politely. They do this knowing it will reduce the youngest children to teary rubble, shouldering the responsibility of explaining why it had to be done.
Eventually, as their kids get older, the parents "should" teach them the importance of not granting any leeway to such hostility -- and that's exactly what this random-rewards, annual holiday mind-suckering is: the uncle's hostility (with a side of attention-seeking).
Not only is it the parents' collective responsibility to ensure that not one of this uncle's selective gifts is accepted, but it's also incumbent upon the older nieces and nephews to speak politely for all of them in one voice: Take your ... whatever it is, elsewhere.
That this apparently hasn't happened is a hint that your brother isn't an antisocial outlier, but instead just an extreme manifestation of general family dysfunction. If indeed that's the case, then your original answer -- refuse those gifts -- is the entire answer.
You simply represent your own family as your conscience demands. You can't make your other siblings grasp that not only is this brother behaving awfully, but they also are complicit for offering up their kids' feelings for him to toy with, year after year.
That doesn't mean you can't say something if you haven't already -- you can, and owe it to all the kids to do so. Best to pose it as a question and not an accusation, though: "Wouldn't it send Brother a message, and our kids, if we all refused his selective gifts?"
Their response will be the second part of my response, in that your brother's ... eccentricity will be a window into your extended family.
I suspect, though, just by your asking a question you answered yourself long ago, that you already know what you'll see. The question then becomes, is the dysfunction contained enough to brush off, or corrosive enough to avoid?