That is true. It was my fault. I read through the rules one last time and tried to change everything and I just overlooked that situation.
Dasmos is talking about the section that said if everyone but flags died he would win. However, this win condition was developed before I allowed the Wario character to survive everything BUT a vote out. Although the Wario role had a disadvantage of being alone in the game, it made it easier to hide, I feel the original win conditions allowed for too easy of a victory.
That said their was a similar win condition that if the teams were TIED 1 flag each, or 2 flags each and no other characters then Wario would win to prevent a tie in the game. Why? if it is 1vs.1vs1 then Wario could just pick who he wanted to win, and thus he should allow himself to win. OR, 2 vs 2 vs 1. If they vote him out then it is 2 vs 2, and assuming everyone votes it is a tie. Not good.
So the Wario role had a few good win conditions. My major fault in the game was not explaining everything perfectly, because I didn't go over all the scenarios that could happen. I was very focused on school.