I see no reason games should not be considered an art form.
Because they're entertaining? Well so are movies, plays, and music (that's why they exist in the first place), but that doesn't stop them from being art.
Because they're interactive? How does giving the audience a way of being more connected to the work make something non-art? If anything, non-interactivity is a limitation of other art forms that video games don't have.
Because they can be competitive? What about painting contests, or award ceremonies (the Oscars for god's sake). Yes, those competitions are between the creators, not the audience, but they're competing nonetheless.
OT: All games are art, but they're not all necessarily good art. Ones that are include: Okami, Bioshock, Braid, Heavy Rain, Ico and Shadow of the Colossus (I know their creator likes saying they're not art, but if those games can have such an impact emotionally on its players, I consider it art).