Arch is perfectly fine for gaming. I use EndeavourOS with KDE and Steam + Lutris (as Flatpaks) on top. Quite similar to the setup you would have on Steam OS, but I would highly recommend using btrfs as your file system and setting up snapshots.*

While I have had little to no problems so far, compatibility issues can still occur on rolling release distros, and it’s extremely convenient to just be able to undo an update.

*This is quite simple btw., you just need to install snapper, snap-pac and btrfs-assistant. The latter serves as a GUI for btrfs setup in general. Create a config for your filesystem root (‘/’) under ‘Snapper’, and under ‘Snapper Settings’ enable ‘Snapper cleanup’. You can also set the number of snapshots to retain there, but note that two will be created per system upgrade by snap-pac. I would suggest to also enable balances and scrubs for ‘/’ and ‘/home’ in the maintenance-tab.