Was this a game of chance or skill?
I will agree that putting this much money into the machine which is clearly rigged is idiotic. However are we not missing the point a bit, I assume this game was being sold as a game of skill not chance.
These claw machines are generally sold as a game of skill where if you are good enough you should be able to win a prize. Yes we know all the games are rigged but it seems in this case that without complaining there was 0% chance of anyone ever winning anything. I assume that this was no information on the box clearly stating that the chance of winning was X%.
Of course most of us would have stopped at some point far short of this, and not put in even more money after seeing the switch changed. But still I would have thought there are some regulations to not allow a 0% chance of winning.
You can't compare this to betting on a horse, playing the lottery or a gambler. All of these are either a game of change or odds. In fact gamblers have to state what their payout rate is and if you read the notices on them many will say 'No matter what option you chose on certain turns you will always lose' (well perhaps not in these exact words). With this information you should know exactly what the likelihood of winning is and then be able to make an informed decision on how much you put in or not.