Jerry Greenspan has been running the Fun City arcade in Ocean City for 40 years, long enough to see children who played games there grow up and bring their children to continue the summer boardwalk tradition. Now he wonders how long it can go on.

"We barely made it last year," said Greenspan, who owns Fun City and is a partner in Sportland, two of the three largest boardwalk arcades. "If the landscape continues the way it's going, I don't see how we can stay in business much longer. I never thought I'd be regulated out of business."

Arcade owners and manufacturers of video games, claw machines and other amusements say their business is being threatened by proposed state regulations. The Maryland State Lottery and Gaming Control Commission, which is drafting the regulations, is seeking public comment and has until next June to make the rules final.

Industry representatives say the proposed rules burden them with too much paperwork and fees on the most popular games that dispense high-value prizes such as iPod Nanos. They also object to being labeled as gambling operations, which they say could hamper their ability to obtain loans, and they note that their businesses have already been hit hard by competition from online games and casinos.

Their protests have been joined by Ocean City Mayor Richard W. Meehan and other officials, who fear that the regulations pose a threat to the arcades that have been a boardwalk mainstay for generations.

"We're becoming such an over-regulated state," said Susan L. Jones, executive director of the Ocean City Hotel, Motel, Restaurant Association, who wrote to lottery director Stephen Martino last month protesting the proposed rules. "The arcades are a very integral part of the boardwalk. … To have a boardwalk without an arcade would be very empty. It's like a boardwalk without Thrasher's french fries, Dolle's popcorn, Fisher's popcorn."

Martino said his agency had its instructions.

"The legislature passed a law, they asked us to regulate these machines," said Martino, adding that his staff has worked closely with industry representatives over the past two years in drafting the new rules. "We're trying to do that in a good-faith way."

Larry Bershtein, president of the Maryland Amusement and Music Operators Association, representing about 24 game manufacturers, distributors and operators, disagreed, saying agency officials have met with industry representatives only three times in two years, and have declined several overtures from the industry to provide advice.

People in the game machine business "truly believe that their livelihoods are at stake," said Kevin O'Keeffe, a lawyer and lobbyist for the association.

Lottery officials began work on the regulations after the Maryland General Assembly in 2012 adopted a bill dealing with several aspects of electronic games and gambling, including illegal sweepstakes game rooms that had opened under the guise of "Internet cafes."

The bill expanded the authority of the lottery commission, a seven-member advisory board to the lottery agency. The commission now has the last word on what machines are legal and illegal.

The new law is expected to bring more scrutiny and more coordinated enforcement, making it tougher for illegal slot machines to operate, said Jaclyn L. Vincent, the lottery agency's director of research and chief of staff.

Senate President Thomas V. Mike Miller said the legislation was meant to establish one state legal standard for game machines not covered in state law. As it is, he said, a patchwork of local regulations cover machines that are constantly changing — sometimes as manufacturers and operators try to evade the law.

"The technology changes on a week-by-week basis," Miller said. "What covers these machines one week won't cover them six months later. … It needs to be regulated, it needs one set of rules."

The new regulations are meant to create categories broad enough to cover an array of different machines, everything from old-fashioned skeeball to a high-tech flight simulator games, games of skill and chance.

There's no official count of how many amusement machines are operating in Maryland, but Bershtein guessed up to 14,000. They can be found in restaurants, bars, shopping malls, gas stations, stores, amusement parks and arcades.

The proposed rules do not apply to gambling devices already covered in the law, such as instant bingo machines or paper pull tab games, or to slot machines in state-licensed casinos or other locations allowed by law.

The regulations say that all other game machines must be registered and carry a lottery agency sticker, and that operators have to file quarterly reports on when the games are moved from one location to another.

The rules also levy fees on certain machines that are considered "electronic gaming devices." They are defined as skill-based games, such as claw machines, that offer the chance to win a prize on one play with a wholesale value of $30 or more.