[Physical theory is the correct theory as the pokemon can hear everything in the outside world while in pokeball]
In addition they are forced to fight other pokemon and some might even be their family, carry out dangerous life and death missions on behalf of their master and sometime be used for manual labor (without any pay). So essentially it's akin to dog fights.
In addition the start pokemon you don't pick is put down by Professor of each game and their corpse is discarded in a dumpster.
Also poaching is actually exist in the pokemon world.
Do you think pokemon promotes animal cruelty?