Minha sugestão é retirar as redundâncias e deixar o código o mais enxuto possível.
import time
def ask(question):
return True if input(question) == "y" else False
def main():
rules = [
"You can't talk about Fight Club", "", "",
"Only one fight at a time",
"Only two people fight at a time",
"No shoes or shirts",
"Fights continue until necessary",
"First-time attendees must fight",
]
rules[2] = rules[1] = rules[0]
if ask("$ Do you want to know the rules?(y/n) "):
while True:
for rule in rules:
print(f"* {rule}")
time.sleep(1)
if ask("$ Did you understand the rules?(y/n) "):
break
print("# Welcome to Fight Club")
if __name__ == "__main__":
main()