dooglus

The site was created by a big-block "nutcase", presumably to demonstrate how the economic majority is in favor of bigger blocks. Unfortunately for him it demonstrated exactly the opposite.

Here he is advocating for increasing the blocksize limit to 8MB as soon as possible: https://bitcointalk.org/index.php?topic=1238605.msg12897706#...

And here's his post announcing the launch of the service: https://bitcointalk.org/index.php?topic=1133634

The site allows anyone to propose statements which all Bitcoin holders can then support or oppose by signing messages with their coins. The anti-small-block question wasn't written by the site owner, but is currently the most supported statement on the site.

Of your three possibilities, I don't think either of the first two make sense when you consider that Gavin was using Electrum to verify the signature:

1. electrum's signature verification dialog takes a message, address, and signature and doesn't the hashing for you; there's no option to provide a pre-hashed input so the hashing couldn't have only happened on CSW's machine

2. the electrum download includes the code used to do the hashing, so if the hashing code was corrupted, it implies the electrum download itself was compromised

So that leaves 3. The electrum developer has said that their .sig file wasn't downloaded from a UK IP address on the day the demo took place, so we know Gavin didn't verify that the electrum download was correct. I expect your 3rd possibility is the most likely one.

Oh, and also claimed to be Satoshi, which implies he owns half a million dollars in BTC

I think you mean half a million BTC, which is about 446 times more right now.

The minimum payout was 1% of the house bankroll

You mean "maximum" and 0.5% (after 1% was found to be too much).

"Investing" in the house was generally too slow and boring for gamblers to consider. They are used to being able to double (or lose) their stake in a fraction of a second. By being part of the bankroll they get to make a 1% return per week if they're lucky. The site ran for a year and made investors a total of just over 40% in that year.

For a gambler accustomed to making 100% (or -100%) per second, 40% per year is insignificant. To anyone else of course it's huge.