What is your rationale for shorting S.DICE?
there's a few forces working against satoshidice.
satoshidice growth was occurring fastest (in btc terms) when there was no problem doing payouts on 0/unconfirmed. exploits caused them to do payouts only after a confirmation in many instances. so satoshidice can no longer provide the same service it provided before. the price doesn't seem to reflect this change.
the space available in blocks is starting to crowd out microtransactions. the fees for placing a wager to continue getting confirmed promptly will have to increase. when considering the higher transaction fees versus payouts satishidice is no longer is as competitive against other bitcoin-based online gaming offerings.
the exchange rate is increasing and the average wager size is decreasing (i.e., a person might still plan to wager $3 at a time. that used to be about 0.25 btc, now it is less than 0.1 btc.) but the fees are the same or going up, and are increasing in terms of cost per wager.
now why none of that may matter is satoshidice is so profitable they have a warchest to build or buy whatever competition exists, and market it to more than make up for whatever loss in profits comes from satoshidice decline.
tl:dr; naked shorting of satoshidice is a crazy risk
