It would be a bad idea to increase frequency, first if within that timeframe one of the players get lucky enough to win more than the house edge in this case the house lose its advantage (applicable to dice game), second for player who is like ben which only play on sport betting and you cant force it to have more events in a short timeframe, third you have to think where is the fund for them to play, may be trading and to finish a trade it takes at least one or two weeks to get out in profit (thus having some spare coins for gambling).
The site makes profit from people betting. They don't care if certain people win, and if someone bets a lot and ends up winning, they might come back and lose it all the next day (even without a wager competition). There are people who play only on the last day and we don't see sites making it an issue.
For sports, a shorter phase might be helpful for sports players as dice players would have a smaller period for them to bet. For example, if we had a one day competition and there were many events on that day, a sports player would be able to wager a lot. If we spread it out to a week, there might not be another day with many events until next week so the sports player basically plays for 1 day vs dice players who could play for the whole week.
You are speaking another way of "peak" in sport events, thus in this case the sports players just sit out for a contest period that has no sport events, and vice versa the dice player might just sit out which contest occuring during a peak sport events, thus the casino might not get their expected wager since one of the players sit out. And another factor could result a lack of interest is the prize, currently it is 400mBTC for a one week event, it could be ideal if the casino can pay the same 400mBTC for each day and I have nothing to comment if this is the case, but if they can't and could only pay 400mBTC/7 for each day, thus might cause loss of interest from one or more players.
Speaking in term of big house which can out beaten any kind of whales (a bankroll big enough to pay out every single win until the whale get into his bad streak), then your statement(s) remain true the house can conduct as many and as frequent as they like taken into account the risk they are able to pay a bad scenario that a single/multiple whales keep winning not one or two but ten continous events before he get into bad losing streak (which he/they can't affort to,lose more).