I think the loophole that people want to exploit, is that Eddie (co-owner) of Stake.com are using a VPN to play on Stake, while he is an Australian citizen.
He can do this to test his platform and products built by developers. It is not bad testing at all and is one of reasons to make that activity. If you are an owner or co-owner, it's not make sense to cheat your company and steal its treasure.
I think people see that as a sign that they too can use a VPN to bypass the restrictions.
The thing is, if the ToS specifically states that some countries are restricted, then people from those countries must abide by the ToS and the laws of those countries, if they use any any means to bypass those laws... then they are breaking the ToS and their local laws.
If they do this, they accept risk to be terminated by the casino and lose money in their accounts. Even if they don't try to cheat, but violate ToS, their accounts will be terminated too.
Casino in their operations, should block (reject) registration from restricted countries at the beginning. It is prevention of cheating, Tos violation from newbies. It will help them to save resources for other tasks than overuse resources for Compliance team to handle user support ticket and scam accusation later.
I can see certain scenarios where VPN use might be legit, for example if I am a citizen of a country where it is legal to gamble at Stake and I am on holiday in a country where it is illegal. I can then use the local countries Internet and then use a VPN to play, because I am still a citizen of a country where it is legal to gamble there.
It's better to take a break for a while than using VPN and facing with potential restrictions. You can provide evidence later to prove why you use VPN but it is headache and does not worth to use VPN.