So when the house is risking more than a 2x kelly, you have a sort of weird scenario where it's bad for the house (it'll probably go broke) but also bad for the player (it'll still have an expectation to lose)
Sorry to derail the scam accusations, but I'm still not happy with this.
What is it that actually goes negative when the house risks over 2x Kelly? It can't be the expected profit per bet, since that is always 1%, hence positive. And it can't be the expected bankroll growth, since that's simply the expected profit per bet summed (or averaged) over all the bets, which therefore is also a constant 1%. So what is it? I can't find a good Kelly resource. They're either too basic, and simply say "expected bankroll growth goes negative" (which I don't think is accurate) or they go far too deep into the math and confuse me.