I think 1% is the lowest gambling casino's house edge can go. If they lower it than 1% then maybe the profit it will generate won't be enough for the website's maintenance and for salaries to its employees as well. If it's above than 1% then it would be difficult for them to attract new users.
I don't agree. They can go lower easily. (Just they don't need that). It actually depends on how many paying players they have and the competition.
As the number of them increases, indeed, at start there are certain costs for better hardware, hosting, ... but after that's done, they can go with lower house edge.
Just that's not necessary yet. The number of good casinos is so small they don't have to cut their earnings in order to gain extra customers (and for now they also have their promotions and games to keep the things interesting too).
And let's be honest, 1% is not that big either. What's the house edge at Las Vegas?
In Vegas the house edge changes depending on the game you're playing, e.g. it's around 5% for roulette.
However, what you said about 1% not being high is definitely true, though it is clearly possible to go lower by benefiting from the economies of scale.
The problem is when newer casinos try to launch with a low house edge, then they don't realize the costs involved in maintaining their site, which eventually causes them to either go under or exit scam.
