The arcade1up stuff (at least the Atari 12-in-1) is bootleg MAME anyway
https://www.reddit.com/r/MAME/comments/a35edo/hacking_the_arcade1up_34scale_mini_arcade_cabinets/
It's MAME 0.139u1 (well a modified build based on that) which is originally from 2010, so falls under the old license, which is strictly no commercial use.
So these things aren't even legal.
If they'd used 0.172 or above they'd be in the clear, as we painstakingly contacted every contributor and relicensed everything for that point onwards.
Well to be fair to the Arcade1up guys, it doesn't actually say any of that on the MAME website:
MAME
Copyright (C) 1997-2018 MAMEDev and contributors
This program is free software; you can redistribute it and/or modify
it under the terms of the GNU General Public License as published by
the Free Software Foundation; either version 2 of the License, or
(at your option) any later version.
This program is distributed in the hope that it will be useful,
but WITHOUT ANY WARRANTY; without even the implied warranty of
MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the
GNU General Public License for more details.
You should have received a copy of the GNU General Public License along
with this program; if not, write to the Free Software Foundation, Inc.,
51 Franklin Street, Fifth Floor, Boston, MA 02110-1301 USA.
https://www.mamedev.org/legal.html#license
The above text implies that all versions of MAME from 1997 to 2018 are now released under GPL v2, or (at your option) any later version.
Also, what you're saying doesn't really make a whole lot of sense. Why on earth would the MAME devs allow current versions of MAME to be used for commercial purposes, but restrict the usage of earlier (and supposedly inferior) versions?
No, it doesn't imply that all versions are covered by that license, that's the CURRENT license, for CURRENT versions, it can't from a legal perspective (and doesn't) override the individual license that is included with each distribution. The 1997-2018 is just how long the project has existed.
As for why, it's simply a legal thing, we went through the process of getting permission from everybody who had code in 0.172 and requested permission to change that license to GPL / BSD (their choice) in future versions. It can't retroactively be changed without going through that process for every single version, so wasn't. As a result, 0.172 and above have a nice clean usable license with very few restrictions, versions below that do not and are still bound by things like the no commercial use clause.
The process of relicensing also involved dropping any code from people who didn't want their code relicensed, or couldn't be contacted (or in some cases, were deceased, and permission couldn't be obtained from the estate) and rewriting it (which took a year in some cases) Any code that couldn't be traced back had to go because it was impossible to relicense it.
It's a well acknowledged process that a number of large projects have had to go through in their lifespan. We can't legally offer the older versions under GPL / BSD because we don't have permission to, we can offer versions 0.172 and above under the GPL, because we do.
The cleanup and standardization of the license was done for good reason, to make situations like this easier to handle going forward, and was a significant undertaking that took the best part of a year to track everybody down etc. It is up to the companies making use of MAME to check that the versions they're using are based off a version that has a compatible license, and that nobody is misrepresenting that license in any way if they didn't get it from an official source etc. That's what legal / licensing departments are for. In this case they either haven't done their homework, or are intentionally violating the license and hoped they wouldn't be found out.
From the MAME side, the whole relicensing thing was done with proper legal advisors etc. because we wanted to make sure, going forward, MAME was a piece of software people could actually make use of.
I've read all sorts of conspiracy theories about how we've only changed the license on the newer versions because we want to force people to use them etc. but the real reason is simple, that's how the law works and there's nothing we can do about that.
Not sure what doesn't make sense to you either, MAME isn't something we're selling, it's our contribution to society, makes much more sense if they can use the versions with fewer bugs than base products around old versions that are never going to be fixed.