Short answers, pulled from the story.
Pong, released by Atari in 1972, was the first commercially successful arcade video game. Two earlier attempts to put mainframe computer games into coin-operated cabinets, Galaxy Game and Computer Space, both appeared in 1971 but did not succeed commercially.
New York City banned pinball machines in 1942, classifying them as games of chance and therefore gambling devices. The ban was also driven by moral concerns; some considered pinball machines tools of the devil with a corrupting influence on youth. The ban was overturned in 1976 when journalist Roger Sharpe demonstrated to the city council that pinball required skill by calling a shot to a specific lane.
Periscope, a submarine simulator released by Sega in 1966, was the first arcade game to charge a quarter per play. That pricing model became the standard for US arcades for more than two decades.
Japan had around 26,000 arcades in 1986. By 2019, that number had fallen to about 4,000. The COVID-19 pandemic in 2020 and 2021 forced many of the large long-standing Japanese arcades to close.
The Dominant Factor Test is used to determine whether an arcade game qualifies as a game of chance subject to gambling laws. It assesses whether chance or skill is the primary factor in determining a player's outcome. For many redemption games such as crane games and coin drop games, its application is considered a grey area.
As a college student, Nolan Bushnell worked at an arcade where he watched customers play EM games such as Speedway and helped maintain the machinery. That experience gave him an understanding of how the game business operates before he went on to found Atari.