Lilwolf - Since you asked, and Greg will probably not be able to answer you because of lawyer-client confidentiality....
Although I am not a patent lawyer in any sense, I have had much experience dealing with patents at my real job as a project engineer with a leading automotive supplier company. Ironically, I have been tied up in patent meetings for the last 2 weeks for some of my group's recent designs, so I have patents on the brain lately.
The low-down on Patent Pending: This means a Provisional has been filed. Even this is a considerable investment, typically around $10,000 but varies on a case-by-case basis. A Provisional legally protects a design from being duplicated before the patent legitimacy has been approved.
Many things can prevent a patent from being valid, but the most common I have run into are:
1. "Prior art" (which you mentioned)
2. "Obviousness" - meaning that if anyone "skilled in the art" would have obviously come up with the same design, it is not patentable.
Although both of these would be investigated by a patent lawyer prior to the patent filing, lawyers and the patent office are not always successful in locating Prior Art. If a patent is granted, then it is up to the owner of the Prior Art to defend their design to invalidate the patent. Defending prior art can easily cost $100,000 and I have seen cases where it exceeds $1,000,000. This would most likely be beyond the financial capabilities of many of the individuals/companies involved in this particular market of arcade controls and MAME cabinets.
Again, I am not an attorney, just the effing engineer that gets caught half-sleeping through meetings for endless hours, so I apologize if some of this is not totally accurate.

--OSCAR