Yep, keep doing this. Drinks are free in Vegas if you're gambling. So just sit at a machine til a waitress comes around. Tip of course though. Dollar a drink.
Also, there is a ton to see and do for free in Vegas. I'm not sure why so many people are amazed at you only having a $500 budget. I don't think I've ever spent that much there.
I'd highly recommend trying to visit as many hotel/casino's as you can and just walk through them. As you probably know, they all have their own theme and it is really just amazing to walk through them all and see them. A lot of them have free events as well like the Belagio water fountains, the Pirate ship show at Treasure, etc. I'm sure a lot has changed since I was last there 5-7 years ago, but you can always find things to do there for free.
But for paying for things, definitely pick 1 or 2 shows. I'd recommend a Circue one and then a magic show. There are a lot of great magicians in Vegas, and the ones you pay for are really good. I'd recommend Lance Burton if he's still around. Saw him twice and loved it both times.
I'd pick one nice restaurant to go to, one that is known/famous or has a famous chef. I can't recommend a specific one since again I'm sure it's all different from last I was there, but you can easily figure that out once your there and ask a hotel clerk or whatever. There are also a lot of good buffets, so just ask for those as well. I remember always liking the Mirage one though.
But ya, for me the best part of going to Vegas is just walking around the different casino/hotels.
