Can’t find the issue right now in the bug tracker but I remember there was a ticket with “Set skip assigning gamepad to player 1” which was marked as fixed.
The issue still exists though, to anyone reading please report this on the bug tracker so it gains some visibility.
It’s simple to reproduce just use add local player node and use the option set skip assigning gamepad to player 1 in project settings.
I have the same problem. It occurs even on brand new project. With this flag on still first pad controls first player - I believe it doesn’t work as intended.