The difference is a matter of degree driven by differences in technical capability. It's not that there weren't ruthless and sociopathic people around in the days of the arcades, it's that arcade machines couldn't store persistent state. That sufficed to render them mostly harmless, because it put tight limits on the extent to which they could be tuned to exploit security vulnerabilities in the human motivation system. It's a bit like the way in principle a plain HTML webpage might be able to exploit a security vulnerability in your browser, but in practice it's much safer than a Java applet.

Short summary:

The arcade machines were real upfront about what's going on. You paid a coin to play, and you paid a coin to cheat. There was no pretension of free and no obfuscation of the transaction. further arcade machines were made at a time when the hardware was not affordable for the home.