Imagine if you were betting on 10%, [...] and the first 1000 rolls were between 10 and 90.
What if some players can outsmart that strategy.
When you play the 10% game, 'lo' wins if the number is <10.x and 'hi' wins if the number is >= 90.x. If the number is between 10 and 90 you lose whether you play hi or lo.
The house can make 85% of your rolls be between 10 and 90, and force you to lose those games. Of the rest you'll win about half, meaning you'll lose a lot quicker than you should.
The client seed means the house isn't able to decide what number to roll, since you pick the client seed after the house has picked the server seed. Without it, the house can roll any number they like, including numbers which are guaranteed to make you lose.