machines do get their own back from time to time,when i worked in the u.k we had machines sited in pubs-i had a service call out to one pub where the landlord said that his machine had a broken glass,sure enough when i arrive the bottom glass of a quiz machine was broken,i asked how this had happened and he told me one of the customers had got annoyed with the machine and punched it then i asked where this customer was,his reply"at the accident and emergency waiting to have part of his hand sewn back together"
,then when i took a close look at the damage i noticed not only lots of blood but lumps of flesh

Sad thing is probably later he told his friends who weren't there one of two things:
a. The truth saying the game was cheating him, and he got back at it, acting like he's a big man, or
b. Lied his ass off about his hand getting injured making up whatever grand story, making himself look cool.
Immediately realizing he is being watched, --cream-filled twinkie-- tries to run out an alarm-activated emergency exit. Security guards attempt to stop said --cream-filled twinkie--, and he throws a swing....Bad idea! Both gaurds immediately place a hold on the still flailing individual and blast him with Pepper Spray. Police arrived a few minutes later, and cuffed a very irritated --cream-filled twinkie--. He was charged with assault and taken into custody.
All for a couple of tickets.

Obviously he wasn't a very good loser.
I'm going to guess the other friends he plays didn't have the game, and/or don't really care about it, so in his own closed world, he could beat the cpu and his weak friends and subsequently thought he was the best, but when he played someone who actually cared about it, his whole world came crashing down.
Did you ever play him again?
If there's any game that you thought you could be good at and quickly find out you're just another n00b, LITERALLY, it's smash brothers melee. Unless you went online, and searched, you'd have no clue about all these advanced techniques that people discovered, that are incredibly useful, and downright necessary to taking your game to the next level(s). I'd go to regional tourneys held by players themselves, with people from many different states. Boy was that fun, and quite the learning experience. I did that for about two years.