Xfire went through a whole life cycle as a startup: launching a game business, getting acquired, and then getting shut down. Now the company has been acquired again and it is going to try to make a run as a betting service where you can challenge your friends in arcade-style games and win prizes.

Today, the reborn Xfire (which was acquired earlier this year by Titan Gaming, which renamed itself Xfire) is launching Xfire Arcade. Starting with just two games, users will be able to play each other and wager virtual currency. They can win prizes on a daily or weekly basis, depending on how well they do competing against others. The new Xfire Arcade will be available on Xfire.com, MySpace and the Latin social network QuePasa.com. Xfire makes money by taking a fee from each virtual currency transaction.

In some ways, this is going full circle. In its prior life under different management, the original Xfire was a skill-based gaming site where you could place bets in head-to-head battles with your friends. That didn’t work out so well and the company morphed into a chat and matchmaking client for gamers. Viacom’s MTV Networks bought Xfire for $102 million. Then it fired the staff and unloaded Xfire to its new owner, Titan Gaming, which took over Xfire in August. Los Angeles-based Titan was in the skill games business itself. It changed its name to Xfire and is now trying the skill-based gaming market again with Xfire Arcade.

With Xfire Arcade, users can win prizes from sponsors such as Lenovo, which is giving away computers, and Turtle Beach, which is giving away gamer headsets. Monetization firm gWallet will provide a virtual currency, Xcoins, which users can use to get into tournaments. Hopefully, this is all going to work out better than it did the first time, said John Maffei, chief executive of Xfire, in an interview.

“The market for skill gaming is much more mature than it used to be,” he said.

Initial games include Heli-Fighter and Taxi Getaway. Xfire Arcade will add more games in the coming months. Maffei says that Xfire has around 6 million monthly visitors. On top of that, the access to the social networks will provide it with an even bigger audience. Rivals include King.com and Worldwinner. While those companies go after female audiences, Xfire’s core users are mostly male.

Xfire has less than 20 employees. Its predecessor, Titan Gaming, was founded in 2006.