"Rigged" makes it sound like they're doing something illegal.
They are fixed-odds of success, like a fixed-odds betting machine. Like scratchcards. Like any online lottery. A predetermined outcome from the second you start, but that choice of outcome is made at random as you press the button / buy the card. There are not billions of scratchcards out there, any of whom stands exactly 1/1,000,000 chance of magically letting you win the car, where you could win the car 2, 3, 4 times over if you're lucky. There are huge number of cards, pre-printed, already determined, and the people who printed them know *exactly* how many "you won a car!" cards that there are before they cover them in that silver scratch-off coating. They know, because they put them there.
When you play the little Monopoly scratchcard game on the National Lottery website, you're not "playing a game". You're assigned one of several million randomly-generated numbers which results - completely predictably and reproducibly when given the seed number - in either a win or a loss. That number will ALWAYS result in that outcome. That's how they know you can't just "reload" the page and get another go - it's already determined whether you won or lost the second you pressed "Buy", but you get to spend five minutes "playing" it out before they tell you.
They already know *exactly* which cards win or lose. They already know *exactly* how many prizes they have to give out (if you did things entirely at random, you might bankrupt the lottery by a run of good luck... instead they create a million card seed numbers, then they run the game for every one, then they remove all the ones they don't want, leaving only those that result in the exact, stated, guaranteed odds, the prizes they actually have available and the number of cards they intend to sell over time). They know *exactly* what card they have given you. They know *exactly* how it's going to play out, and even how much money to set aside each day for prizes.
But the card is selected at random from a huge bunch of cards with pre-determined outcomes. That's modern gambling. That's how it's worked since video poker was first used in Vegas. The outcome is random, from a set of pre-determined outcomes, which removes *all* uncertainty for the casino/lottery while providing you with EXACTLY the odds they state. It's a tombola, where you know that you're not going to be able to win three of those ugly Christmas jumpers, because there is only one prize like that anyway, but the chance of winning the sweater is still fixed and provable.
Grabber machines are no different. Inside the machine is a binary "grip / don't grip" bit. If the odds on the machine says the chances are winning are 1 in 100 then in 1 in 100 games it will grip, averaged over its lifetime. To not means serious investigations. That doesn't mean "play a hundred times and you'll win". But there's a 1 in 100 chance of winning overall. Guess what... if by chance a thousand people won earlier in the day before you, it might well not have any prize allocations left in whatever unit of time it averages over (e.g. 24 hours, a week, a month, etc.) - everyone after that is going to be a loss. But walking up to the machine at random at a random time gives you a 1 in 100 chance, still. That's not true of a truly random event, but it doesn't have to act like a truly random event to be a licensed gambling machine (hey, kids, let's introduce you to licensed gambling venues as a bit of fun when we go to the seaside!) - it has to be "fair" and it has to stick to the stated odds. If it saw, say, a woman coming and refused to pay out because she was a woman, that's unfair. But if it gives out 1 prize for every 100 plays, on average, over time, and takes nothing else into consideration, then it is considered fair. That's what happened.
If anything, the operator here has literally *biased the odds in her favour* to give her a toy, guaranteed, out of pity. She received better than the advertised odds. And she's complaining. They can do that if they want... they are giving you BETTER odds than advertised. So long as it doesn't affect the rest of the time for the worse, then it's actually a courtesy they can exercise. No different to giving you a machine that says you could win 1 in every 3 but they actually just let you win 1 in every 2 because it makes you happier.
If he'd done it the other way - SAW YOU COMING and switched the machine into a-billion-to-one mode, while still advertising 1 in a 100, then they'd have a case to answer. He didn't.
If you don't understand maths, don't gamble.
If you don't understand the game or mechanic, don't gamble.
And if you only "think you know how it works", you almost certainly don't.
Don't even get me started on the "game of chance" / "game of skill" thing.
These things are gambling machines that randomly give you a prize. But more often than anything, randomly DO NOT give you a prize.
Stop introducing your children to them, especially possibly as casual entertainment with a tiny amount of disposable income(*). Buy the damn teddy instead. And stop pretending that they are games... they are not. They are gambling machines. Even the penny falls is a gambling machine, designed to make money for the operator only, and they make that money from you.
(*) I'm a mathematician. I've been to casinos, been to Las Vegas and gambled aboard a cruise ship (the QE2). I don't pretend for a second that I'm not just spending money on entertainment. But even a few pounds, at the right priced table (which they have far more of than the high-rollers** tables) can last you hours. I'd spend that on a movie that I will have no right to see except for that single instance for that price - seriously I can pay over £10 an hour just to watch a movie once! Or a drink in London. Or an entrance fee. Or any number of other things that cost more and give back less. I know the money will go to the venue, eventually, the game is to eke it out - rather than blow it all in ten seconds by just handing a £10 note to the croupier, you hand that same £10 to the croupier and play a few dozen games a minimum stakes against people you have a chat with (depending on the venue). Yeah, you might walk away with £20. But you *know* that you're more likely, by orders of magnitude, to walk away with £0. Else you're an idiot who shouldn't be anywhere near a card table or roulette wheel.
(**) "High roller" is casino code for "rich idiot with nothing better to do than throw money away".