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But yeah if you are lucky and you win a big bet you can do it but let's be honest if I deposit for whatever reason 0.1 BTC and I win 10 BTCI withdraw them (as I think 99.9% of people) and I leave the contest... So in the end in my opinion, only players with big loss will get some cash back from the contest.
I agree with you, I'd definitely do that. But let me show you another possible scenario. Considering that the house edge would most likely kill you if thousands of bets were made and that it's almost irrelevant within 10 bets, let's see what can happen in theory.
Say, someone deposits 320 BTC and then does martingale with 50% win chance. This person can wager 320 BTC with just 6 rolls:
Win 20 BTC along the way, and become eligible for a good prize, because it would be enough to take the 3d place in the last round, for example:
Of course most of us wouldn't do that because we don't have even close to that amount in the first place, and even if we had, we wouldn't risk it. But for someone with thousands of BTC it looks like not a big deal.