Can the Police really arrest for this?

They probably can if the players are causing a disturbance to anyone around. Plus sometimes police randomly come up with things to arrest/charge people with... (they don't stick to the black and white areas of a law. they go into the grey areas.) If they weren't actually causing a disturbance or breaking any laws, a lawyer could have any charges thrown out pretty quickly. Btw, they play this game at my school too.