Casino Royale Rebate

Always a crazy place, the Royale is now offering crappy (e.g. 9/5 DDB) pay tables. But they refund your first $20 loss. And then they seem to refund $20 for every $100 loss after that. Now the "refund" isn't in real money. It's in free play. Doing what I think is the math, that seems like the EV would be 9/5 DDB: -2.13% x .80 = -1.704%, which would be 98.286% return. Still not so great, since 9/6 DB is 98.981%. Am I doing it right?

One consideration is whether comps/points are earned during Free Play.
Often (usually) no comps are earned during Free Play.
Point Play yes. Free Play no.

Casinos started awarding Free Play instead of cash for tourney wins (except the top 2 or 3 winners).
Player comes in 5th, for instance, wins $3000 in Free Play.
Player bangs away the $3000 in Free Play. No comps earned.

Not that I would ever turn down Free Play. Might hit something good.

Just that it might figure into your equation.

The math behind loss-rebates is complicated because they only refund your loss and not your win, it's a lot like pricing stock options, but it sounds like this promotion is very good and has positive expected value.

1) Free play is always worth face value multiplied by the return of the game ie. $20*97.87=$19.57

2) I can't calculate the exact value of this promotion without more details but it sounds like it has positive expected value. One way to see this is to imagine it's a coin flip game like craps where you win 48% of the time. If you bet the entire $100 on this game at once then your expected value would be =.48*100+.52*(-100+20)=$6.40. So your effective return would be 106.4% for that single bet.

Interesting. I think I will ask my brother. He is a nuclear physicist and knows a lot about this sort of thing. My initial reaction was that it was very strong, as you demonstrate. It seems like it's more of a system than a promotion at the CR, and so I wondered how the casino could offer it without losing.