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.
Lets say its PvP but dont you consider on maintenance and expenses on maintaining the site? As an owner- you would be willing to pull out money for others benefits?
About on that Edgeless thing you said it is indeed possible that they would head up on that way.Anything can be change when they do saw that they already attracted lots of users and do impose fees in near future but the BIG question is, would they able to attract gamblers?