Would you spank your kid if your kid was up out of bed in night when not supposed to be and turn on his video game system and it woke you ?

Yes,  remove access to the gaming systems, all electronics.  But you are going to have to be tough here, and not give in at any point. This kind of tough love can be hard to do as a parent, but if you do it, it reaps great benefits

I would immediately take all of the kid's electronics away.  

Yes- but just a swat or two across the butt. Nothing more than that. And then I'd take away the electronics until the child was older. He's too young to be spending time playing video games anyway. He needs to be outside and getting fresh air and exercise, not sitting on his rear end in front of a TV all day. Sitting for long periods is just as dangerous as smoking a pack of cigarettes every day, you know. It puts him at risk for heart disease and obesity, not to mention cancer.

Take the gaming system and ground them.

No.

Perhaps temporarily confiscating the video game would be more appropriate,

I believe that spanking, if it's used at all, should only be for the most serious offenses, or for disobedience that endangers the child or someone else.

My video games were on mute late at night when people are sleeping.  What kind of idiot kids so you have?

I would never using spanking in the first place.  I would take my child back to bed and take the gaming console back to room each night to avoid the problem.

Nope, that would be met with the game system being removed.

You are the parent.  Take the video gaming system away until he or she learns not to do this.  Believe me, faced with the permanent loss of the video games your child will change this behavior immediately.  Spanking NEVER works btw.  It just reinforces the fact that you don't understand how to properly parent. 

I would disconnect the system.