The physical location nonsense is quite unusual for gambling sites, isn't it? Typically TOS says something about being a citizen or a resident of a certain country. There is no plausible way to enforce it (KYC can't prove your physical location) so it's pretty much like it's deliberately added to screw gamblers over.
It's actually pretty common. I don't think the US has any regulation preventing online casinos from accepting bets from US citizens, only people located within the US. Regulated US sites even use geo-location technology to confirm that all wagers are made from specific states (NJ, NV, DE).
This is an obvious money grab by cloud bet. Their terms don't mention citizenship and even if they did, pay the man his money and then tell him he's no longer welcome.