Martingale systems definitely do not cause casino owners to "lose substantially" - the bettor cannot match the casino's bankroll and any amount of money won back after the first bet increase is actually the bettor's. The casino can afford to let you double because they are only ever putting the original amount bet at risk.
Yep, this is certainly true - I've run into it since I bet this way most of the time when playing blackjack in casinos. One of the first things I do before sitting at a table is calculating how many bets it takes to hit the highest possible before hitting the limit, and I have hit it plenty of times (won some of them, lost others).
If you can reasonably match the bankroll, it seems like the players' edge against the house is that they can determine when the game ends (assuming the house can't refuse a bet).
The problem is of course matching the bankroll to the point where you can afford a long losing streak - it's just not practical.
It could only happen if the tables had a ridiculous limit which almost never happens. If it did, I could see a few billionaires grouping together to be able to bankrupt almost any casino by betting a billion on black instead of red.
