IANAL, but my guess is it's in the same gray area that betting on sports with your local bookie or playing online poker is. More specifically, the site itself is probably illegal in the eyes of most agencies but the players participating probably aren't acting illegally.
That said, given the fact that there were a total of 14 bettors in the first two rounds, this sounds like the smallest of small fry when it comes to the world of online gambling.