Video games aren't just for kids anymore. The District's latest craze is a multimillion-dollar industry that has swept the city, attracting a growing number of adults, and becoming a source of estra profit for some stores that would have frowned on video games a decade ago.

Signs of video mania are everywhere -- in movie theaters, restaurants, bars, fast-food restaurants, ice cream parlors, drug stores, grocery and convenience stores--practically any place with four square feet of space to spare. And new arcades, loaded with 30 or more of the gadgets, are popping up around the city in commercial areas near residential communities, the business district and warehouse zones.

At lunch time, some of the downtown arcades rival eating spots in popularity, and several customers recently admitted to slipping away from their jobs to be near their favorite video machine. "My boss just thinks I take an exceptionally long time in the restroom," explained one game fanatic who asked not to be identified.

Electronic-game devotees include a new breed that bears little resemblance to the players of yesteryear in dimly lit, smoke-filled pool halls, or the boisterous crowds of young men in penny arcades. Many video-game addicts are women, and many are more sophisticated than the stereotype of game-parlor clientele.

Nonetheless, leaders of several District and suburban communities are concerned that video game arcades located near residential neighborhoods might introduce undesirable elements into the community.

"We haven't had a serious problem so far because we haven't had a summer with these arcades yet," said Edward Grossman, an Advisory Neighborhood Commission 6B member in the Capitol Hill area who heads the ANC's task force on arcades. "But complaints so far regarding arcades are that drugs tend to be associated with them, kids are panhandling for money to play the games and there is general congestion in the area."

Grossman said he has few complaints with arcades in the downtown business district. But he is critical of the city's zoning regulations, which he said fail to limit arcade operating hours or provide the city with revenue from video-game profits. He said the ANC task force recommended a moratorium on arcades near residential areas until the communities had more time to study problems associated with them, and that the city should consider monitoring arcade operating hours.

Local vendors estimate that customers spent about $10 million last year to play Washington's video games, and they expect more will be spent this year. Throughout the city, video-game parlors have begun to spring up and small stores and boutiques--cashing in on the games' rising popularity--have started installing games for easy profit.

Kathy Malie, manager of Reader's World at 1006 Vermont Ave. NW, which sells magazines, cigarettes and candy, said she decided to drop the shop's greeting-card section and replace it with video games.

"Even at a 50 percent profit, it's hard to make much money on a 35-cent card," Malie said. "We now have 13 video games, and the cash flow is definitely much better than with the greeting cards."

Walter (Buster) Riggin and his wife Bonnie own the B&B Newsstand at 13th Street and Pennsylvania Avenue NW, where their primary business is selling newspapers, magazines and books. Riggin said he first opened his newsstand with six pinball machines to amuse children while their parents browsed through the literature. But after putting in the first video game, he noticed that the adults were playing it as much as the children. So he expanded his game section to 35 of the electronic moneymakers.

"We need these games to survive, because magazines and newspapers wouldn't pay this downtown rent, which is as high as $35 to $50 a square foot," Riggin said. "We have watched other small businesses around us fold, and if we had to count on our paper sales, we wouldn't make it either."

According to city records, 1,155 video games were licensed during the 12-month licensing period that ended last May. For the first nine months of the current licensing period, 1,750 video games were licensed in 195 locations in the city, a more than 50 percent increase over those licensed the year before.

D.C. Licensing Bureau Chief Joe Richards said about 50 new games were licensed in February alone, and that numbers are increasing daily, not to mention the unlicensed games operating in the District. Violators convicted of operating unlicensed video games face a maximum penalty of a $500 fine and 90 days in jail.

Officials and vendors alike say the video games, which can gross an average of $200 to $300 a week, have become a multimillion-dollar industry in the District.

City Council member Jerry Moore (R-At Large) wants to snare some of that profit for the city, and has introduced legislation to place a 10 percent tax on video-game earnings. One of his aides said Moore believes that the licensing fee--$19 for one to three machines, then

9 for each three-machine multiple up to a maximum fee of $319--is minuscule compared to what the machines earn. The proposal has been referred to the council's Committee on Finance and Revenue, which has yet to schedule further action on it.

One of the area's fastest growing arcade concerns is Flippers, which in a year has opened three new game rooms within walking distance of one another in downtown Washington. Those sites--at 1375 K St. NW, 1140 19th St.NW and 1800 I St.--represent only the beginning, with more Flippers openings in the works, according to Stuart Fitzgerald, the company's vice president of operations.

Flippers is owned by the Hunter Vending Co., a local vendor of jukeboxes and cigarette machines for 23 years.

"Last year we realized there was a void in the video amusement centers because they were all geared to kids," said Fitzgerald. "But we knew from our game rooms in hotels, bars and restaurants that adults were interested in these games, so we decided to go into the game-room business as a first-class operation to appeal to adults."

Flippers is not alone: new arcades are springing up all over the city. Business has boomed so much that Sharon Mack and Bob Bassette, owners of the G Street Arcade at 1332 G St. NW, opened their parlor last fall with games they own and some owned by others. They share the standard 50-50 split of earnings with the other machine owners and Mack said they plan to open another arcade at 1218 New York Ave. NW under the same arrangement.

Other game rooms include the Station Break Family Amusement Centers in L'Enfant Plaza and Georgetown, owned by Time Out Family Amusement Centers, a Virginia-based company.

Another is the Golden Dome Arcade at 1405 K St. NW, part of a franchise which is planning to open nine more video-game arcades in the metropolitan area in the next few weeks. While the idea of earning money quickly is attractive, vending companies and arcade owners say the games business can be risky, with many of the same hidden costs that other businesses encounter.

Some say the video game craze began in 1972 with Pong, an electronic version of table tennis. The fad appeared to be dying until 1979, when the Midway Co. came out with Space Invaders, followed by Atari's Asteroids. These games, which involved shooting attacking aliens, quickly fascinated children and adults about the same time that science fiction movies such as Star Wars grew in popularity.

But in 1980, video games hit a new peak in popularity when Midway introduced Pac Man, the industry's most popular game ever. The game involves guiding the Pac Man character through a maze, gobbling fruits, dots and pursuing monsters. This relatively nonviolent video game unexpectedly drew women into the arcades as well.

"I like Pac Man because I'm not shooting at or hurting anyone," said Karen Davie, a 19-year-old clerk typist at the State Department. "Besides, it's just fun to run through the maze and to be chased around by all the monsters."

But once inside the arcades, some women find they like many of the other offerings, too. Crystal Smarr, a 20-year-old clerk at the Department of Housing and Urban Development, frequents the Station Break arcade in L'Enfant Plaza. She said she likes the more difficult games, and has manipulated her way to a high score in Pleiades, a game that combines shooting space attackers and maneuvering a space ship through tight spots.

"I can usually beat the men at their own game, and I like that," Smarr said. "Also, it's just a good way to blow off steam if I get bogged down at work or get angry with my boss."

The new games, which are faster-paced and feature musical or cartoon intermissions in order to attract women, also are extremely popular with men.

"I like the challenge to my coordination, my speed and my skills," said Calik Jabarei, a 34-year-old computer specialist for Action, a government agency. "I come to Flippers early in the morning, at lunch time, after work, and any other time during the day that I can, because playing helps me relax."

Bernard Dory, 37, said he visits the Golden Dome arcade whenever he can. An attorney in private practice, Dory said he has arranged leases for clients who have opened game rooms, but he plays the games to get his mind off work.

"I like the games because they force me to use my eye-hand coordination skills," he said. "Also, it's an added assurance that I haven't lost everything just because I'm over 30.