Change the house odds to 1.5%, none of the betters will leave and still better then SD.
There's no need to make it harder for the 0.0003 BTC type bettor - it's the 75 BTC bettor like Choad I just saw...
We should just enforce a max profit and a max bet.
The variance on a Bernoulli distribution with a win prob of 0.5 (close enough) is 0.25 / the number of bets.
We want the variance to be small, therefore a lot of 0.0004 type bets. We take little nip out of each one.
It's not the edge its the variance and with a lower edge you must have a low variance and that means lots of little bets and not a few big ones.
I really hope Doog reads this. It's math, there's no room for argument. We need a max bet and a max profit - I recommend 1 / 1,000 capital - that still allows a 36 BTC bet right now - thats 4 grand.