I recall playing "Stacker" for a little while in the 2000's. It used an LED dot display for gameplay, which was a simple timing game where you "built" a tower by stacking up the blocks, with it getting faster at each level.
What it did was exactly as you describe: it had a minor reward level that you could always win, and then a few levels above that where the game would cheat and instantly warp the block ahead to make you lose. I did get a win out of it once(and got an iPod mini), so I think I did come out ahead, but that was it.
Overall, it's better to be good at pinball(replay scores) or DDR(adoration of strangers).
Thanks to the Internet, this has been recorded on video: https://www.youtube.com/watch?v=ofEb9fM8m0Q
This isn’t really the same because most gambling devices are regulated so that, while you can adjust payout percentages, you cannot remove random chance. That any given play has some percent chance of winning, even if it is adjusted very low or dynamically adjusted. This game is simply forcing a certain number of guaranteed loses before considering a payout. That isn’t luck.
At least there is skill involved with pinball
In Japan the machines pay out a lot more often due to the strict laws against gambling, but the prizes are a lot smaller. You'll put ~$2 in and get a soft toy that probably cost 50c to make, but it still makes it feel a lot more fun than trying/failing to win bigger prizes.
It was a dollar per try, and I shoved in 5 bucks. By the 4th try it was NOTICEABLE that if you press the button at the "right time", there was a lag before it overshot it and you failed. I pretty much could guess that something like the article discusses was at work, and was simply more a game of luck.
Obviously I stopped after that, as a pure luck game is not as fun. If I had known that the default was 700 losses before payout as a default, I would have had a nice drink or 3 and counted the many people that tried it throughout the day
As a side note, saw one winner at the machine get a wrapped stack of 500, 1 dollar bills