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Inside almost every arcade cabinet is a Dell Optiplex running Windows 7, or 10 if its really recent. There's no such thing as an arcade board anymore, they're all Dells, or sometimes those HP mini PCs, usually with the protective plastic still on.
Daytona even uses a Raspberry Pi to control the second screen. SEGA intentionally ships those with no-brand SD cards that consistently fail after 3 months. It's in their agreement that you'll buy another card from them instead of just flashing the image onto an SD card that won't break.
The Mario Kart arcade cabinet uses a webcam called the "Nam-Cam" that is mounted in a chamber with no ventilation, which causes it to overheat and die every few months, so of course you'll have to replace those too. The game will refuse to boot without a working camera.
Oh yeah also all arcade games with prizes are rigged. All of them. We literally have a setting that determines how often the game will allow wins.
One time on vacation, my little sister and I found a crane game in the game room of our hotel that was clearly over tuned - basically every button press was another win, it was great. We still remember it fondly. A stupid thing, but even at that age we knew these are usually scams and we we're stoked to just basically get cheap toys.
Sounds like it'd be pretty simple to just replace it and not tell them. If they tell you they know it should've broken down by now, just ask, "Why, did you intentionally sell me something defective?"
Psst, that's another secret
If I was to open up a classic video.game arcade and run it entirely on downloaded roms is someone coming to take me down?
Yes. You have to have a license to charge people money to play those games.
Otherwise you would have seen a ton of arcades open already
Edit: I only know this because I asked a guy who ran one. His machines were in pretty bad shape and I inquired why he didn't just do as you thought.