This isn’t a close call, legally speaking. There’s a contract in place. Even if you hadn’t sent the check his remedy is really to force you to pay the agreed-upon money (specific performance) or to sue to break the contract and return the machine for your failure to perform (replevin). Keep in mind that I do criminal law, not contracts, and law school was decades ago. But it’s really that clear cut in any jurisdiction I’ve heard of.

So legally the machine is yours to keep so long as you make the funds available to him as agreed. The question is whether you want to do that. Is there an impact on your reputation in a community that you care about? Are you impacting future business, sales, purchases, or relationships? In other words, is being right and winning a worse position for you than giving up the game? That’s a question that only you can answer.

It’s likely a small claims case, regardless. (Well, hopefully that’s true.). If you present these facts to a judge in a small claims court it should be a very straight forward issue for the judge to resolve.

(While I’m a lawyer, this is not legal advice. Consult with a lawyer versed in your jurisdiction’s law before you decide how to proceed, if you want a true legal opinion. But damn, this seems extremely straightforward to me as presented.)

Edit to add: A couple of points. 1) Your sale of two machines to buy this one is important. This is “detrimental reliance.” Meaning, you relied on the contract to make a move that is otherwise harmful to you. If you give him the game back and he gives you the check, everything is not “all fixed.” You’re still out those two games. That’s a big deal. 2) As others have said, you can sell it back to him for what you think it’s worth, not what you paid for it. It could be a loss to you, or a profit. But I believe it’s your machine to sell, not his to repossess. And 3) I wouldn’t worry too much about the fact that he has your check. If you give the machine back, put a stop payment on it and move on. If he were to cash that check that would be theft/embezzlement. Relatively easy to make him pay in civil or criminal courts (or both). Most folks don’t just default to pure theft. Guys with movers and multiple pinball machines are even less likely to do so (and easier to recover money from). It if you suspect he’s planning to take the machine and your money, keep the machine. At least until he produces the check.

He can prove it through sworn testimony, coupled with the timing of the sales. Direct evidence corroborated by circumstantial evidence is pretty compelling. I’ve seen people sent to prison for life based entirely on the sworn testimony of a witness. For a contractual dispute…should be enough if he’s even remotely credible.

Doesn’t this go for every check ever written? There are loads of reasons to be a bit paranoid these days, but this seems to be a bit much. The vast majority of people in this world don’t respond to petty disputes like this by committing wire fraud. Just a tiny bit of vigilance is sufficient to protect you against the vast majority of banking fraud.