Gambling Behaviors: How Do Gambling Losses Affect Future Wagers?

Abstract

This study looks at how previous gambling losses affect future betting behavior in online cryptocurrency gambling markets. Using roughly 50,000 real betting observations from Bustabit, the paper tests whether gamblers become more aggressive after losses or instead pull back and bet more cautiously. Using both OLS and Fixed Effects regression models, the results show that players generally reduce their wager sizes following losses rather than engage in strong loss-chasing behavior. After controlling for individual player tendencies, the Fixed Effects models show statistically significant decreases in future bet sizes after losses, suggesting that caution and loss aversion may play a larger role in online gambling behavior than traditionally assumed.