Of course, if you are hosting at a public location you do need to consider the legal implications of the content. This would be my main cocern in allowing the operation of an osu! arcade system.This. Although, he did say:
BTW, Challenge Arcade (our local arcade) is a beta test site for OpenITG.So basically they are not worried about this, since using OITG with it's ITG theme and ITG songs is quite illeal already. (Plus the hoards of custom songs that they most likely have there)
From your point of view releasing this for commercial arcade use would be quite problematic though. The easy solution is to release and not think about it further, but that might come back at you quite quickly.The only real solution I see is paying for song licenses, then selling the game with the licensed songs for arcade use. But that's a lot of extra work and requires quite a nice sum of money for a nice bunch of song licenses.