Designing an effective reward system for arcade games is crucial for player engagement and retention. Key factors include balancing challenge and reward to maintain interest, using immediate feedback loops like points or visual effects to reinforce positive behavior, and incorporating variable rewards such as random bonuses to create excitement. Additionally, progression systems with unlockable content or levels motivate long-term play, while social elements like leaderboards foster competition. Ultimately, the reward system must align with the game's core mechanics to feel satisfying and enhance the overall experience, keeping players coming back for more.