Sega aimed to outperform Namco's Ridge Racer (1993). The concept was suggested by Tom Petit, president of Sega's American arcade division, with input from AM2 director Toshihiro Nagoshi, who became the game's director and producer. Daytona USA was developed by AM2 after a meeting of the heads of Sega's regional offices for a game to debut the Model 2 hardware. Sega partnered with GE Aerospace to develop the Model 2, which renders 3D graphics capable of texture filtering and texture mapping. Daytona USA is one of the highest-grossing arcade games of all time.

The first game released on the Sega Model 2 arcade system board, a prototype debuted at Tokyo's Amusement Machine Show in August 1993 and was location tested in Japan the same month, before the complete game released in March 1994. Inspired by the popularity of the NASCAR motor racing series in the US, players race stock cars on one of three courses. Daytona USA is an arcade racing video game developed by Sega AM2 and released by Sega in 1994.

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