1. In the start menu, go to Options

2. Choose the 2nd menu, next to Key config menu

3. the last 2 options are the Difficulty (対戦CPU思考) and the number of rounds (勝敗本数) respectively. By default, the difficulty is on Normal (ふつう): pressing the left arrow switches to Easy (かんたん), pressing the right arrow switches to Hard (むずかしい).

   By default, the number of rounds is 2 (２本制); pressing the left arrow switches to 1 round.

Thanks to Jeebee_Games for the translation!