We experimentally demonstrate that gain materials properly encapsulated into the shell surrounding metal nanoparticles (NPs) are responsible for the modification of the overall plasmon response of engineered nanostructures. A comparison between designed systems based on functionalized core-shell NPs having different encapsulated dye molecules is presented. Experimental observations of Rayleigh scattering enhancement, accompanied by an increase of transmission as a function of gain, reveal striking optical loss compensation effects. Fluorescence lifetime measurements demonstrate a quenching of dye photoluminescence in functionalized core-shell NP samples with respect to pure dye solutions, confirming the strong resonant coupling occurring between the gain medium and gold NPs. Experimental evidence of a selective modification of the gain functionalized core-shell Au NP extinction curve is found, in good agreement with the results of a simplified theoretical model. The model verifies the causality principle through Kramers-Kronig dispersion relations for the investigated gain functionalized plasmonic nanostructure.