SatoshiDice could have keep running, it would have just cost more (min 10k sats) for each of their "alert transactions".
Even that isn't true. It's not a real cost. Just money they have to take out of the bet that they're giving back to the user in a few seconds when the bet completes.
Thanks the clarification, I'm not an expert on the specifics. But from what I remember from around that time, is that SatoshiDice was basically "priced out" of using the Bitcoin blockchain as the transaction fees rose above a fraction of a penny.
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Fees rising probably killed them indeed. Also, people get bored of novel things eventually too.
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