They're not really borrowing from anyone - they never get access to the borrowed coins - they're only allowed to invest them, and only for as long as they are able to pay back the loan - so there's never any chance that they will default on the loan, and so there's never a need to hold any collateral.

In effect the lending means the site is operating a fractional reserve operation, which many will dislike the thought of. But I think in this case it is sound to do so. There's no chance of a "run on the bank" causing problems, since all loans are automatically secured by restricting what the lender can do with their loaned coins.

Sudden large changes in the maximum profit per bet would probably result from this feature, and were another reason I didn't love the idea.

When you say it could "go bad fast", mostly that only applies to people who over-borrow, don't you think? It wouldn't go bad for the site itself.

One thing that was pointed out when I brought this up in the past is that investing at huge leverage is effectively a big gamble. No sane investor would do it, but guess who would... that's right - gamblers would! It's a way of gambling with high variance and a positive expectation. So maybe offering such a feature would turn the whale gamblers into whale investors, and we'd be left without any whale gamblers.

I still think it's an interesting idea though.