It should be working.  It gets the env variable and makes that a subdirectory of your gossip dir. Then it starts a new database in the subdirectory.

There are a few cases it might print an error (watch for errors at startup) like "cache" (reserved) or anything with a "/" in it or otherwise is not a simple directory name.

Make sure the env variable is getting passed to the gossip process either by exporting it from your shell (e.g. export GOSSIP_DIR=blah) or typing it on the same command line as gossip (e.g. GOSSIP_DIR=blah ./target/release/gossip)