you can change your mame defaults to suit the outputs of the encoder

this is taken from the standard Hotrod ctrlr file in mame32
<port type="P1_JOYSTICK_UP">
<newseq type="standard">KEYCODE_8_PAD</newseq>
</port>
<port type="P1_JOYSTICK_DOWN">
<newseq type="standard">KEYCODE_2_PAD</newseq>
</port>
<port type="P1_JOYSTICK_LEFT">
<newseq type="standard">KEYCODE_4_PAD</newseq>
</port>
<port type="P1_JOYSTICK_RIGHT">
<newseq type="standard">KEYCODE_6_PAD</newseq>
The encoder they have in the Hotrod doesn't output the normal Up, Down, Left, Right like the Ipacs but instead uses the numpad for directions.