It's not a legal gray area. It's illegal period. Tournament organizers in CS are often times just wagering that government entities won't be aware of said tournaments and/or won't bother using their resources to pursue legal action/sanctions. That's not feasible when you're riot games and operating multiple gigantic esports ecosystems.
At that size, gotta do everything legally or government bodies at some point are gonna punish you and definitely cause issues in the future.