From the gambling house's side it avoids regulation, plain and simple. From the gambler's side: People already own skins (from playing normally) or want skins

From the gambling house's side it avoids regulation, plain and simple. From the gambler's side: People already own skins (from playing normally) or want skins that would be expensive to buy outright. Gambling provides an exciting way of exchanging them. This kickstarts the gambling market. This initial activity then attracts more serious gamblers looking to make a profit in this low-regulation gambling environment populated by many inexperienced gamblers. Cue feedback loop as more and more serious gamblers get involved.