Recently playing a bartop at the book at Caesars, I did the "double up" option after hitting a straight. After winning that bet, it said (something like) "Double up limit reached" and sent me back to the regular game. Aside from the beating I’m sure the LVA collective will have -- bartops suck -- I know, there’s no edge on double up (that I know of). Have you ever seen this before?
Our answer is no. We've never seen a screen that limits the double-up option.
Granted, we don't do double up much, but we asked around and others who play it occasionally have never seen it show up either. Certainly not after a single play.
That said, we would assume that the limit screen you saw is an option for the casinos/bars to use if they want to limit their exposure to a good run of double-up luck.
Also, we wonder how one would go about checking it. We suppose that you could play a nickel game and see how many bets you could make without any risk before you either lost the bet or were stopped out by the machine.
Also, in discussing this, we found ourselves speculating about how far a casino would want to go in giving you, as you rightly point out in the question, a vigless bet. There's no edge on double up, so how many coin flips will they make with you?
Now we put it out there for the wisdom of the QoD "collective." Have you even seen a screen that tells you you've reached a limit in your double-up betting?
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