Could be anything and it's hard to know just going by a pic. A video would make it a little clearer (preferably from power-on) but still. Couple of questions:
- Does the game coin-up / play blind? ( i.e. sounds + responds to coins / inputs )
- Is the display static or does it seem to randomly put crap on the screen.
If the game *doesn't* play blind, check the z80's reset pin. It should be high. If it's a constant low, check the schematics and follow the trace to the watchdog portion. If it's pulsing, the watchdog's working but the CPU isn't able to reset the watchdog, which could be a number of things (bad rom/ram, bus contention).
If it *does* play blind, it can still be any number of things but at least it's restricted to video. Judging from the pic the graphic roms seem to good, as are the shift-registers and the horizontal / vertical timing chain, unless the picture's rolling / cranking out crap. Since you had sprites visible, line-ram seems to be okay too. Could be the VRAM-addresser or a bad RAM.
Not much to go on but keep us posted and, if you can, post a video!
-Y