I assume it's to adjust the speed of the paddle?

The one under the little cap marked in red here?


It's to fine tune the Vaus paddle position on the screen in case it gets out of alignment.

dp

Ah, so it's for calibration.

Yeah, pretty much. I had to replace the pot on one of my controllers. It looked like someone jammed a screwdriver into it and smashed it. Fortunately, it used an off-the-shelf pot from Radio Shack and was able to solder a replacement in.

The first Famicom Vaus didn't have one, so I think Taito got complaints or something. The NES Vaus and the Arkanoid II Vaus have the pot for calibrating.