@Tiger-Heli, that's what I find so strange. I often read that commercial use of MAME is strictly prohibited, but I can't find that in the license. People argue that the wishes of the devs should not be violated, but if ones downloads the software and uses it on a commercial MAME cab, how are you to know that this is prohibited if not from the license text.
Okay, I did some more digging in mame.txt. The applicable portions are:
II. Cost
--------
MAME is free. Its source code is free. Selling either is not allowed.and
The source code cannot be used in a commercial product without the written
authorization of the authors. Use in non-commercial products is allowed, and
indeed encouraged. If you use portions of the MAME source code in your
program, however, you must make the full source code freely available as
well.
Usage of the _information_ contained in the source code is free for any use.This has been expanded to mean that you can't profit from MAME, but I think a literal interpretation would be: I can't burn MAME to a CD and sell it for $5 at a flea market or on E-bay, and I can't copy the MAME source code, change a few lines, tack a front end on it, and sell it for $50 as "Tiger's Mega Emulator CD".
The mame.txt also clearly specifies that most of the ROM images are copyrighted.
Your (valid) question is "why doesn't the license say that you can't use MAME in an arcade machine. I am only guessing here, but I can think of two reasons:
1) I'm not sure how much you can restrict what someone does with a product. Let's say I sell Deer Hunting rifles. I can include a warning that the device is intended for shooting deer and should not be used for shooting quail or targets or people, but I'm not sure I can enforce that. There is some question whether the software license for Windows is valid, since you can't agree to the license until you open the product, and you can't return the product if you disagree at that point, but I think Bill G's lawyers would win that one.
2) The license is there to protect the MAME devs. Possibly, they don't care what you do with the software in regards coin-op. You would be possibly infringing on the rights of the game developers, or their parent gaming companies, or whoever bought them, and maybe the RIAA, etc., but as long as the MAME devs can say "Hey, we just wrote some software, it's not our fault that it was used in an arcade machine, leave us alone.", they really don't care.
The problem with that is what someone pointed out in a previous similar thread on basically, "enticement to violate copyright", which was applied to devices to allow you to copy commercial music CD's - (theoretically, copying a commercial music CD (for other than backup purposes) would be illegal, but making a device so you could do it would not be). MAME may run afoul of this as the software doesn't have a lot of functionality outside of the roms for the games.