[stigmata]

So it's not a discount on the house edge. It's a discount on your losses.

As you play a large number of games your losses will approach the expectation from the house edge and the two become the same. However, over a small number of games this could lead to a +EV situation.

For example: Betting 1 unit on the banker in baccarat:

This is the normal situation, from wizardofodds:
(0.458597)*1*0.95 + (0.446247)*(-1) + 0.095156(0) = -0.01057985 expected return.

If we add in a +0.1 (e.g 10% of 1 unit cashback) on a single bet loss, it leads to a +EV situation:
(0.458597)*1*0.95 + ((0.446247)*(-1) + 0.1) + 0.095156(0) = 0.08942015

So on a single $100 bet the EV is $9. The problem comes when you make multiple bets. This is because if you win one hand and lose the next two, your rebate will be around $9 (a bit more because a win only pays 0.95). If you win 100 and lose 101 hands, the rebate will still only be around $9.

On a single bet it is a discount on your one loss, sufficient to overcome the odds. On multiple bets, it is essentally a discount on the house edge.

I'm thinking I could be doing something wrong though.....
This could perhaps be combined with bonus whoring?