Book about a kid finding a strange arcade that has a virtual reality game that shows your darkest thoughts

You might be thinking of Mindmaster (1997) by Clive Gifford.

LibraryThing offers a brief synopsis:

Pete Clark, grieving the death of his father, becomes caught up in the world of arcade games at The Zone, a gaming hall run by a mysterious and dangerous man who just may have found the link between the computer and the human brain.

The back of the book, which can be read at this preview from archive.org, has another synopsis:

Just imagine... an arcade game that can read your mind and play with your darkest thoughts. Just imagine... a machine that steals your dreams. Just imagine... the Mindmaster. There is no escape.

And using the 'search inside' function, I was able to find the following extracts, which indicate that:

• Early on in the book, the protagonist, Pete, apparently does something to upset a girl in his school, named Fiona.

• Shortly after that, he's chased by a gang of bullies, led by Fiona's older brother, Stefan.

• Subsequent to that, he finds himself at an arcade venue across town, where he meets someone named Rick.

The bell rang and everyone began to troop out. First to the door was Fiona. For a brief second, Pete caught her glance. There were tears welling up in her eyes. Pete was surprised to feel a sudden stab of guilt, and quickly turned away.

In the playground at afternoon break, Jez raced over to Pete. "Heard about what happened in English today."

"What?" Pete began, surprised.

"It's all over the school," said Jez. "You're sort of a hero. Fiona's a pain. She deserved it. You know she's gone home for the day?"

Pete shuffled his feet as he thought of her face. "I er... I think maybe I went too far."

"Nah, she had it coming to her." Jez smiled. "But I just hope you're ready for her big brother."

"What? Big Stef? But he's not at school anymore," Pete said quickly, but Jez had drifted off to swap game tips with the computer nerds from Class 3A.

Pete didn't actually know Fiona's older brother, Stefan, but he knew all about him. Big Stef was a bully, big and tough as you'd expect, but with a razor sharp mind as well. He exactly how to get what he wanted, how to touch kids' weak spots, even getting them to hand over their lunch money at the click of his fingers. Pete felt nervous just thinking about him.

Rounding a corner, he stopped dead. Straight ahead of him, a gang of older boys, all dressed in black tracksuits, stood waiting. But it wasn't the number of them that caused Pete's heart to lurch, It wasn't even the way they bunched around him. It was the sight of the boy who strolled out from the back -- the biggest of the bunch. It couldn't be, could it? Pete swallowed hard. But there was no mistake. It was Fiona's big brother, Big Stef, and he was heading straight for Pete.

The timing was perfect. Now was Pete's chance. He made his break, and sprinted down the road. With a huge bellow of "Get him!" from Stefan, the gang gave chase.

Looking behind him, Pete saw two of them unchaining their mountain bikes. He vaulted over a broken piece of park fence and raced across the grass.

Big mistake. His brain cursed his decision. The open ground was perfect for bikes. He heard the gang's whoops in the distance behind him.

Pete continued sprinting, his lungs pounding. There was someone on a bicycle in front of him. Someone he knew. It was Graham Johnson from school.

"Graham, Graham!" Pete called. "I need help. Can you give me a lift? QUICK!"

Perched precariously on the handlebars, Pete shut his eyes as Graham pedaled as hard as he could. Out through the other side of the park, Pete and Graham raced. The bike wobbled uncertainly and Graham had to swerve to avoid a couple of young kids. Pete glanced over his shoulder at the park. The bullies were a long way back.

"The name's Rick, by the way."

"I've got to get back," Pete mumbled.

"Come on, let me show you these tips." Rick pulled a handful of coins from his pocket and slipped a couple into the Jinza machine. "There we go. Two games to sharpen you up."

Pete hunched over the Jinza console as Rick stood at his shoulder, taking him through some of the moves. On the second game, Pete actually made it to a bonus screen. The game erupted into a series of bright flashes with a triumphant blast of sound. Pete felt a sudden surge of pride as a couple of players nearby turned around and looked at him.