AFAIK it can only do text games, but I don't know what improvements IBM has made in two decades. The other limitation is that the terminal buffers input until you press Enter, then sends the entire screen, so only turn-based games are practical.
The buffering is a neat feature. Your AS/400 could be extremely busy (sometimes the operator would prioritize a very urgent process), but you could do a screenful of code, then press Enter and go for a coffee.