There's the key phrase: Random number generation.
Based on the chatlog they've inspected the scripts. So technically it's still not gambling, it's a skill-game.
It's not the Z$ that makes things legal, it's the absence of randomness.
Since random numbers can be generated from outside of
SL I would suppose they inspected the scripts also for communications.
Thing is... if it's skill-based then that would mean that a skilled player can wipe them out. So it's either they've got a bad business model or they're counting on majority of visitors (paying to enter) not to be able to recoup the entrance fees.
I am assuming the chatlog's legit for the purposes of the above arguments.