Arcades definitely attracted that derelict culture in the US, but I don’t think that was the cause of the downfall.
Arcade game manufacturers charging $20k for the latest and greatest cabs and in turn the arcade operators passing the proverbial buck onto us did it in IMO. In the late 90s when you could get an arcade perfect (or good enough) port with more/better features on console, arcades just dried up. Hell, the only reason Jap arcades are still standing is because everyone is still addicted to those retarded Pachinko machines.
Then again, the only reason 99% of the arcades left in the US are still up is because of those damn ticket games and DDR/Guncon games.