Im sure that it is activated. (The main difference, is that seamless travel is a non-blocking operation, while non-seamless will be a blocking call.)
If the host presses start within my lobby the game will start, so the Game Mode and Player Controller change. The process would be:
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All Player get collected within the lobby (Lobby Game Mode) - Event Handle Starting New Player
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As soon as the game starts, the game mode changes to Gameplay Game Mode - Event On Swap Player Controllers
It should not matter if you use a specific lobby map or not