"Double or nothing" - Seinfeld season 6

In "The Diplomat's Club" (Seinfeld Season 6 Episode 21) the phrase in question is used in the following context:

Kramer, one of the show's characters, is gambling with a stranger, and he's down by some amount. Kramer proposes a "double or nothing" final bet, which is accepted. Kramer ends up winning that bet... and it's later shown that he walks away with a cheque.

I don't get this. Given the definition of "double or nothing", how is he walking away with anything at all? Isn't the idea that his previous debt should be merely cleared upon winning?

Solution 1:

You're not wrong about the expression. "Double or nothing" means doubling or canceling the existing debt. In this case, the $3200 Kramer has already lost betting on airport arrivals would either become nothing if he wins the next bet or $6400 if he loses. (Within the show itself, he wouldn't've actually paid that amount even if he had lost: he would've forfeited his collateral, a valuable bag of mail that Newman had previously stolen from David Berkowitz's route.)

You're wrong about two different aspects of the episode itself. First, there's a time skip.

Earl: I should've quit at double or nothing.

That is, he didn't quit at the double or nothing bet on the Ithaca plane arrival. He continued to bet (and lose) off camera. Second, Kramer doesn't walk away with anything. Because Elaine shows up and reveals that Kramer's friend Jerry was personally responsible for the late Ithaca plane that got Kramer out of his hole, Earl Hafler refuses to pay for his own loses (which he had begun doing in traveler's checks, rather than with an actual check).

In other words, the bet ends up finishing at "nothing" after all.

Solution 2:

Yes, "double or nothing" means a doubling of the debt or a cancelation of the debt. If the debtor wins the bet, the debt is canceled.

I'm not familiar with that Seinfeld episode, but I believe the purpose of the show was to be funny, not necessarily to make sense.