Pachinko is Pachinko, not an arcade. I'd appreciate a less patronising tonality, especially because you are wrong in saying that in Japan, Pachinko and Arcades are seen as even closely related.
May I ask what is your alleged expertise on Japan based on? I lived in the country for several years.
I think what you've heard is probably a reflection of SOUTH Koreans who work in Japan, who are discriminated against by the Japanese, and as such work in places like pachinko parlors because bigotry keeps them out of more reputable and better paying jobs. They do ship money back to family in SK.
Northern Koreans are trapped by their regime and escapees are rare.
The bigotry towards South Koreans in Japan and how so many of them are forced to work in pachinko or other shady businesses is so common there's even a famous novel about it:
The former is actually really nice. FYI, if the place you went to is a SEGA or a Taito Station, then it's very likely a game center. It does have some machines that use "medals", which I assume is some sort of gambling thing, but it's just a small subset. The main focus is on fighting games, arcade games (well duh), rhythm games(like Ongeki, maimai Deluxe which I love), Densha de Go! (a realistic train driving simulator with the inside looking like a cockpit of a commuter railway train), some robot games, Dance Dance Revolution, Kantai Collection, Fate/Grand Order, zombie shooters and many more. I will admit that atleast one Taito Station in the Tokyo suburbs has the smoking smell in it, but otherwise they are pretty nice places.
The other type is well, the pachinko and slot machines shops/arcades. They are the gambling machines, and almost everyone I know has a negative impression of them. If someone tells me they go to pachisuro for fun, I will just be polite on the surface, but internally I would avoid associating with them any further than required. The way to tell these apart is that they will very likely be in front of, or within 2 minutes walk of a station, will have smoking allowed in it, will have something like "new machines!" or "renewed machines!" in their advertisements, won't allow anyone below 18 or 20 to enter, and will have slot machines and many old people spending away their life savings inside. I avoid those like the plague.
All in all, I love the game centers though. If you get a chance, do try one of the games I mentioned above in the 2nd paragraph. Maybe you will find something you will like. :)