Not sure what your local laws are, but since you are striving for 100% legal... If you're charging for plays, then you'll (your friend) will also need a tax 'stamp' (or whatnot). I'd think that this is your no.1 concern regarding legality of a coin operated amusement device. Not sure how much those cost, but considering the amount of plays vs. the cost of the tax vs. the cost of the electricity to run it = might not be making any money. This is, after all, why you don't see arcade machines around much anymore. Like oni2382 said, perhaps the best bet is to use a dreamcast, don't charge for plays, and get the return in happy customers (lol, I'm sure that there's a clever marketing term for this...)
Rick