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Sony Playstation // Takara Roulette Controller (Japan, 2002)
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First guess, probably just outputs as one of the analog sticks. Always outputting as though it's pushed all the way to the edge and it rotates with the wheel.
The wheel might be passive and that little piece to the right might just be counting clicks.
Doubt it, you wouldn't be able to know which color was where. Unless the player had to manually set it every time they started the game.
Good point, not sure.