Progressive jackpots work differently than regular casino wins. They are generally paid out by the game provider who has created the game on which the jackpot has been won, not by the casino in which a player has managed to win it.
After a progressive win, the game provider transfers the money to the lucky player, with the casino functioning as an intermediary. Therefore, it makes no sense (in most cases) for the casino to apply the win limit to these winnings. If they do this, they only send a portion of the money to the winner, and basically keep the rest. That’s why some game providers sign agreements with casinos, based on which, the casino cannot withhold legitimate progressive winnings from the player but have to pay them out in full. There are some exceptions in which large groups of casinos have their own progressive jackpots. These cases are different, of course.
Applying win limits to progressive jackpots wins is never acceptable. If a casino does this, it is basically stealing money from the player and/or the game provider that created the game on which the jackpot has been won. The casino shouldn’t limit wins from progressive jackpots at all. These are not paid out by the casino, so it doesn’t make sense for the casino to restrict their size unless it is required by the regulator.