They do now for sure. Morrowind at least was a lot harsher. It wasn’t just racists. There were groups who still practiced race-based chattel slavery. Now they are mostly too scared to even mention it as a possibility.
(Although I would argue Starfield is pretty racist in it’s creation. A large portion of black characters have African accents. This is long after colonization, and theoretically there would have been lots of race/nationality mixing after leaving earth. Sure, some places may retain or even strengthen their accents, but it probably wouldn’t be race based anymore, or at least not the same as in modern day earth. It’s so uncreative and uninteresting, and seemingly racist in its portrayal. I’m not sure if I’m the only one who noticed this, but it aggravated me.)