As far as I remember, because I haven't visited the site in a long time and I'm not going to, they supposedly used the deposited bitcoin to finance their mining operations, and with what they got from bitcoin mining they could pay that interest and still have a net profit for themselves. There was a message saying so on the page. But who knows. What happened to this site is so mysterious that we can only speculate.
Most people believe Freebitco's ownership changed long ago. They used to have good support, and the website was more functional. They used to fix bugs and glitches quickly to avoid negative impacts on their website. But as you know, there are a lot of issues on their website, and they have been doing nothing to keep it up and running. It seems they don't care about customer feedback anymore.
Why would they do it if they can operate their business without spending a dime on new development? People should do their own research before they play. I think we do research even if we are old players and come back to a casino after a while.