I'm an SC resident with some hopes of starting an arcade here. During my research, I believe the biggest thing killing small arcades in SC are the ass-backwards arcade laws.
$250 for each machine every two years. Now, if that's a top earning machine, no big deal. Drop in the bucket. However, if we are talking 'REAL' arcades (the ones we love), well, take a look at DreamTR's thread:
http://forums.arcade-museum.com/showthread.php?t=156295&highlight=arcade+profit
The real games get no quarters these days. There's a very good chance that you'll be having a ton of machines that are earning $1 every week. In two years, that machine will have only made $100. But wait! $250 every two years! That machine will have only made you -$150. And that's not even taking into account electricity, repairs, lease, etc.
Basically, if you have nothing but the classics in your place, you're dooming yourself in SC. Blame the Department of Revenue.
There's only two solutions as I see it. One is to have nothing but the latest racing games, shooting games and redemption games. The other - and the one I hope will work - is to have a mix of the afforementioned, but also charge a modest admission fee and keep the non-earners on freeplay. By having them on freeplay, you avoid having to pay the $250 for those machines. By charging a cover fee, you are still making money - and hopefully enough people will be drawn to the prospect of "free" games that they'll be willing to pay to get in the door.
(At least, that's how I see it from where I'm sitting. Currently, I'm just the outsider looking in.)