The Blizzard representative explained it like this:
If the game is played an any public event at which there is *any* money swapping hands (be it for entry fees, dues, donations, etc.), such actions are prohibited unless the responsible party purchases a site license from Blizzard. They would then be licensed to hold public tournaments and displays.
He did not, however, followup with any further information. As far as we are concerned, the ruling stands: MemphisLAN discourages and denies all connections to Blizzard games played at the event. Should players decide to host tournaments around such games, MemphisLAN will deny those parties cover should legal crosshairs arise.
Simply put: DON'T PLAY THEM! ;p