All current multi-game boards are illegal. End of. The only reason they don't get pulled on ebay and places like that is because the people in charge aren't clued up enough - they're just PC's with emulation software and JAMMA connectors, but as they look like an ordinary PCB to the layman and aren't obviously programmable, the dolts regulating the sites don't delve further.
Why do you think links to them are banned here?
What he said.
With the possible exception of _some_ versions of Ultracade*, and the official Namco Reunion boards (MsPacman / Pacman / Galaga) all the known multi-game boards are illegal.
Running a bootleg PCB, or a PCB with unofficially modified software (region hacked, game swapped etc.) is also Illegal.
Even running something like the Phoenix CPS2 sets might get you into trouble as they're hacked code, not approved by Capcom and allow you to run games 'out of region' (Capcom run their own at-cost repair service) You could argue it was a repair job, but Capcom would no doubt argue otherwise.
Most of the multi-games are based on MAME, even the 48/60 in 1 systems, which look to be based on an old version of MAME4ALL (the low spec hardware version)
There are a couple which are non-emulation based and run a large number of 68k based games, which aren't MAME, but are also Illegal.
The ones that run on original hardware (multi-neogeo carts, multi-cps) are also Illegal.
The majority of games produced in the 80/90s in Korea are Illegal, because they simply used hacked up code from other people's games, and likewise, stole graphics / sound. Likewise, a fair number of Italian produced games.
http://mamedev.emulab.it/haze/2008/06/19/entirely-stolen-drawings/and an older (5 years!) more complete article I did about these things
http://tinyurl.com/34vfaon(there are many more examples, and after emulating world rally it looks like blomby car only stole graphics, not code in that case)
I'm not sure if this one is legal.. they did rewrite the game.. but I think Namco might have something to say anyway ;-)
http://mamedev.emulab.it/haze/2010/03/13/digging-home-the-point/Many gambling games have also been deemed illegal in various places due to regulation changes (which is why you see those photos of 'arcade' graveyards full of them) You're usually required to destroy them when they're decommissioned, which is why emulating them is important.
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In summary .... If you're running anything but an original authentic board on location then yes, you're running the risk of being prosecuted if you're found out. Likewise, if you're selling them, there is always a risk.
Most of these things are still sold probably because
a) the companies have no idea which of their game PCBs are bootlegs anymore (for older single PCBs)
b) the amount of money they could hope to gain through the legal process isn't worth it (most of the people making these things are based in Asia)
*Note, Ultracade did get taken to court over all of this, probably because they were a much easier target (being US based), and were advertising their goods as being genuine and licensed when the copyright owners felt otherwise, claiming they had no contract / license with them.
Likewise if you start bootlegging the *newer* stuff that they're still trying to sell now then the legal gears start to move.
MAME emulates and documents this stuff so that you don't have to, and to make it easier to identify if what you have might not be an original product.