New and Improved.
You may have seen Arduino Claw Machine [version 3]. This machine was a bit pricey to build and looked like a cnc-converted-to-claw-machine. I went back to the drawing board to address these issues: cost, complexity and design.

Machine is about 1:6 scale, perfect for fun-size candy and other small toys/prizes. Footprint is ~15 x 18 x 24 inches, made from wood, stepper motors (Nema17) and an Arduino Mega. Stepper motors move the gantry and a servo motor controls the claw (giving the claw an analog grip, not just open/close). Some parts are sourced from the plentiful DIY 3D printer market, other parts are custom 3D printed.

WHY IS IT SPECIAL? The claw machine functions just like traditional claw machines in arcades, except my machine gives you more control and fairness. The game is based on a timer (there is an LCD indicating how much time is left) which is set to 50 seconds. Insert a quarter (can be set to free-play), and press start. You have 50 seconds to move and position the claw, grab a prize, return it to the "prize chute" and go for more. Once time runs out the claw closes, the gantry moves back to the 'home position' and the claw then opens dropping anything it might be carrying. Unlike the traditional Arcade claw machines, my DIY version gives you full control over this claw in the X,Y,Z axis and the claw grip itself. The only restriction is time. Personally, the game is more fun since it's based less on one-time spatial judgment and more about motor skills and planning the best route for multiple prizes.

Step 1: Materials

I was able to reduce the cost of this machine by 47% compared to the previous machine I built. The number of parts was dropped to about half of the parts in this machine, not to mention it looks more like a claw machine now. Here's a list of parts totalling ~$253.00 USD. One could remove the 4x20 LCD and build the PCB on perf board, dropping the cost by another $20.

Step 2: Assembly

I spent some time making this video, as sometimes it's easier to explain assembly in video.

Watch the video.

Step 3: Code + Arduino

The flow diagram shows what this claw machine can do, and how it goes about doing it. You can see the idle states, the homing routine among others. Programing this machine was very rewarding, as it provides so much feedback due to the nature of the machine. I included some code but with a more abbreviated functionality. I would be doing you no help giving you all the code. That would be too easy;)