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Loser stays on is a slang term for a variation of the popular system of Winner stays on. The only difference is that in this style the one who loses continues to play and in turn learns the game faster while those with better skill and more practice sit out.
This style of play almost always takes place in an environment with friends, like at home on a console as opposed to an arcade, for a couple of reasons. First off most arcade games prompt the loser with a continue screen and a count down from either ten or twenty to insert another coin to play again. Secondly, this system can lead to dirty gameplay because real life money is involved. Those with higher skill could intentionally lose so they can continue playing. It's also quite embarrassing have a group of strangers in an arcade laugh at you for suggesting this.
- Person 1: "Let's play Super Smash Bros. Melee!"
- Person 2: "Yeah, but person 3 sucks."
- Person 3: "hehe, true, true, I do."
- Person 3: "Let's play loser stays on"
- Person 2: "Sissy"
- Person 1: "Fine, we'll play by sissy rules"
- Person 3: *cries*