The reason is the patent/license issues of the MPEG codecs. Someone could make a claim against the MAME team, if they found out.
There are other codecs being considered, but it will be a while off.
Consider Daphne (daphne.rulecity.com) if you like LD Games. It supports Dragons Lair, Space Ace, Thayers Quest, Super Don Quixote, Galaxy Ranger, Starblazer, Cliff Hanger, Cobra Command, and Bega's Battle.
Daphne needs BOTH the rom images, and the video. For the video, it supports connecting an LD Player to the computer via serial cables (output to a TV), MPEG1, and MPEG2. You can even use a DVD-ROM of Dragons Lair or Space Ace from Digital Leisure, with a conversion tool as well.