The Free Hoops software is basically a vastly simplified version of the software that I've got running in my Skeeball machine, and all of the Skeeball holes use IR beam break sensors for detection. They are currently being driven by a Keywiz, but if you can make your Arduino simulate a keypress when the IR sensor is triggered then you should be able to use the software no problem.
Making an Arduino simulate a key press is counter productive, lol but what you've described is very interesting. So how do you work the IR? Do you have it always on and when the IR is broken it triggers a break? Can you make it four players but one player at a time? Can you include sounds? Can you change the timer?
Not sure how you'd go about implementing it with an Arduino, but using the Keywiz it's as simple as wiring the sensor (
https://www.adafruit.com/product/2168) like a standard pushbutton. The sensor has the circuit open when the beam is unbroken, and when an object breaks the beam it closes the circuit and the Keywiz recognizes it as a button press. I have been very pleasantly surprised with the accuracy of the sensors and they are plug and play with the necessary resistors already included.
The game only allows for simultaneous play, not turn-based play so it's either 1 player or 2 players at the same time. It has a GlobalSettings.txt file where music/sounds are configurable, timer is configurable, graphics are configurable, you can turn high scores on/off, and you can turn on/off a "Blitz" feature that makes shots made in the last X seconds worth X bonus points. The only requirements for the game are that you use Windows and have 3 buttons to navigate the menu (up, down, and start) and at least 1 input to act as basket detection (2 if you want 2 players).
The game is made entirely with ActionScript2 and I am just a hobbyist with little programming knowledge, so input methods are limited to keystrokes.