Although you can win or lose real money, BringIt.com is not considered online gambling, and it's legal in 39 states.
The site, which lets players challenge other gamers for money, says it is different from online poker and other games of chance because video games are considered a game of skill.
BringIt is set to emerge from its "beta" test version in the next few days. It's free to sign up, provided you are at least 18. The site makes money by taking a 10 percent cut from people's wagers and a $4 fee from winners when they withdraw their loot.
Founder and CEO Woody Levin, 30, said most of the players on BringIt play for small amounts of money, $5 or $10. It's not really for "hardcore, crazy gamers," he said, but rather, people who "want to put their money where their mouth is, a little bit."
To ensure that first-time players don't go pawning engagement rings, BringIt limits players' entry fees to $25 for the first 10 games they play. The limit increases in steps until it reaches $500.
BringIt supports the PlayStation 2, the PS3, the Xbox 360 and the Wii. Players challenge each other on the site, but play on their consoles. BringIt holds players' entry fees until the game is finished. After the game is done, it verifies the results and credits the winner, minus the service fee.
To attract players of a broad range of skill sets, BringIt has separate tournaments meant for novice players and expert gamers. Levin compared it to the handicap system in golf or the weight-class system in wrestling.
The updates to BringIt will include premium memberships, Facebook integration, leaderboards for each gaming console and the ability for up to 16 people to play in a team against 16 opponents.
BringIt says the 11 states that currently ban playing video games for cash are Arizona, Arkansas, Delaware, Florida, Indiana, Iowa, Louisiana, Maryland, Montana, Tennessee and Vermont.