Casinos bring in so much tax revenue that it's hard for an individual to beat cases like this because the system don't want to piss off and piss on what is a money tree for them.
Did they freeroll him?
Sort of!
That wasn't the plan going in because they certainly didn't know he would try to gain the edge he did off them otherwise they just tell him to take his action elsewhere. It possibly turned into a freeroll if they discovered half way through what he was doing with his helper but for Phil to prove they did know and continued to take his action is practically impossible.
When these things happen a casino should suck it up the first time and eat the loss. They can take this as a learning experience and change their rules to be clear you can't do certain things to prevent getting beat this way in the future.
A vague law in the casino business basically protects them by saying the casino is always right (until proven otherwise and gl with that), unlike that old expression that the customer always is.