From my experience, there are two "types" of arcades in Japan: one called "game centers" (ゲーセン, pronounced gay-sen), and another "pachinko" or "slot", also called パチスロ(pachisuro).

The former is actually really nice. FYI, if the place you went to is a SEGA or a Taito Station, then it's very likely a game center. It does have some machines that use "medals", which I assume is some sort of gambling thing, but it's just a small subset. The main focus is on fighting games, arcade games (well duh), rhythm games(like Ongeki, maimai Deluxe which I love), Densha de Go! (a realistic train driving simulator with the inside looking like a cockpit of a commuter railway train), some robot games, Dance Dance Revolution, Kantai Collection, Fate/Grand Order, zombie shooters and many more. I will admit that atleast one Taito Station in the Tokyo suburbs has the smoking smell in it, but otherwise they are pretty nice places.

The other type is well, the pachinko and slot machines shops/arcades. They are the gambling machines, and almost everyone I know has a negative impression of them. If someone tells me they go to pachisuro for fun, I will just be polite on the surface, but internally I would avoid associating with them any further than required. The way to tell these apart is that they will very likely be in front of, or within 2 minutes walk of a station, will have smoking allowed in it, will have something like "new machines!" or "renewed machines!" in their advertisements, won't allow anyone below 18 or 20 to enter, and will have slot machines and many old people spending away their life savings inside. I avoid those like the plague.

All in all, I love the game centers though. If you get a chance, do try one of the games I mentioned above in the 2nd paragraph. Maybe you will find something you will like. :)