Traffic and ads wont be sustainable when we do talk about gambling site expenses.It would not suffice for sure.
I think they would not really afraid of the expenses as OP said it's PvP
It's PvP so we don't have to worry about bankruptsy due to payouts.
Honestly I don't 100% agree with this idea for long-term even though it's good for start. I know one gambling site called Edgeless (EDG), almost the same with this. They are offering zero house edge but 0,83% (CMIIW) in practice. They use the words "0% house edge" in order to attract people to join them. Perhaps, in the future (after getting a lot of users), this new site will do something with their users (either good or bad) or applying low house edge in order to pay the expenses.