Gameplay video - transitions do not rescale with a clip

So the case is simple.

I have two video/audio tracks. One is from my camera the other one is from my gaming console. I put them together and sync them in Adobe Premiere. Now, the raw footage of the game is my background as my camera recordings has been rescaled and positioned in bottom right corner (portraying me playing the game). As seen on many, many other gaming videos.

Now the problem is that any transition effect added to my camera video track, spoils the footage of the game in the background as if Premiere was adding this transition to the original full size video rather then the rescaled one in the bottom right corner. So for instance when I apply dip to black it affects both video tracks instead of just one.

The idea is to be able to smoothly hide and show the footage of me playing the game whenever conveniant without messing up the game footage in the background.

Any help is very appreciated.