the wires to the microswitch on top of the handle box control the "coin scavenger coil".
whether that's the same as the "coin lockout coil" that is behind the coin mech isn't clear. I have seen a schematic that has both those coils on it.
in any case, it's not critical to game operation. It's likely the microswitch is bad so they unhooked it. You can sometimes take apart or squirt solvents in the microswitch to clean the contacts inside and make it work.
I probably don't have a schematic for that exact version of a 1088, but I will put some paperwork for the base model 1088 at
http://bingo.cdyn.com/slots/ in the next hour.
a lot of the circuitry is usually the same for all the variants of a model, so you can use the 1088 schem to see what turns on the tilt light and go from there.
I do have more schematics for 1088 versions, but it would help to know:
1] the full model number on the plate on below the handle (model number is the top one on the plate)
2] the numbers stamped into the slotted reel index discs. The should be p-684-something
3] the number on the payout counter disc below the hopper. Should be M-645-something