Ruin-preventing guardian mechanisms for online gambling and outcome markets

Ruin-preventing guardian mechanisms for online gambling and outcome markets | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Ruin-preventing guardian mechanisms for online gambling and outcome markets Prasad Prafull Karnik This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8432023/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Online outcome markets spanning gambling platforms, prediction markets, sports-betting sites, crypto exchanges, and retail brokerages now form a fragmented ecosystem in which individuals can take leveraged positions on events ranging from minutes to decades. Existing harm-minimisation tools, such as deposit limits, self-exclusion, and platform-specific loss caps, operate in isolation and ignore cross-platform exposure and time structure of outstanding bets. We study a ruin-preventing mechanism for retail users: a cross-platform, time-aware guardian that aggregates speculative exposure across venues, tracks realised losses and time-discounted open risk, and restricts or modifies actions to keep probability of financial ruin below a prescribed threshold. The interaction between user and guardian is formalised in a discrete time model with heterogeneous contract maturities and tilt-prone behaviour, and we characterise a family of guardian policies that enforce behaviour-adjusted budgets on realised loss and time-weighted open risk. We also describe an implementable, device-level architecture that combines read-only connections to financial and platform services with local parsing of app and web interfaces on user's own devices, enabling cross-platform risk monitoring even when operators expose only coarse or adversarial interfaces. Guardian design is cast as a constrained mechanism-design and Stackelberg problem, in which a designer chooses loss and risk budgets, discounting, and behavioural-sensitivity parameters to maximise a stakeholder objective such as user utility subject to an ex-ante bound on ruin probability. From a game-theoretic perspective, the guardian can be viewed as a ruin-aware allocation rule in an online outcome-market game, with a stylised Stackelberg analysis characterising maximally permissive constant-fraction caps. Behavioral Economics Economic Theory Finance Ruin prevention Online outcome markets Cross-platform risk aggregation Time-aware risk management Probability of ruin Stackelberg games Stackelberg equilibrium Mechanism design Constrained mechanism design Dynamic games Behavioural risk control Behavioural economics Risk budgets Time-discounted exposure Loss control mechanisms Financial self-regulation Financial self-control systems Device-level enforcement Harm minimisation Retail speculation Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8432023","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":564586319,"identity":"665d6075-ebe0-44de-8c83-0b5384fd8bc3","order_by":0,"name":"Prasad Prafull Karnik","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA3ElEQVRIiWNgGAWjYFACHgaGDxCWMZgrQYwWxhkka2HmQdLCQFCLuUTu4c+2O+7Jy7cf3mzwc88dGckG5oePbuDRYjkjL00690yx4YYzacWJPc+e8UgzsBkb5+DRYnAjx4w5ty2BcQNDjvEBngOHeeQYeNikCWgx/mzZlmA/v/+N8cE/RGoxkGZsS0hsAOpNBtkiTUiLZc+7NMneMwnJG248KzaWAWqRbCbgF3P23MMffu5IsJ3fn7xZ8s2Bw/YSx5sfPsbrMBDB2IAsxIxHOQ4to2AUjIJRMArQAABpl0t9ReQxxwAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0009-0007-7952-1384","institution":"Independent Researcher","correspondingAuthor":true,"prefix":"","firstName":"Prasad","middleName":"Prafull","lastName":"Karnik","suffix":""}],"badges":[],"createdAt":"2025-12-23 09:10:32","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-8432023/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8432023/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":99310360,"identity":"652f9f18-a28f-4bee-8ede-b541a34fca8c","added_by":"auto","created_at":"2025-12-31 16:12:37","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":593911,"visible":true,"origin":"","legend":"","description":"","filename":"guardianruinpreventionpreprint.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8432023/v1_covered_2ca97b8d-f987-44ce-b0c5-5c261fe23d26.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eRuin-preventing guardian mechanisms for online gambling and outcome markets\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Independent Researcher","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Ruin prevention, Online outcome markets, Cross-platform risk aggregation, Time-aware risk management, Probability of ruin, Stackelberg games, Stackelberg equilibrium, Mechanism design, Constrained mechanism design, Dynamic games, Behavioural risk control, Behavioural economics, Risk budgets, Time-discounted exposure, Loss control mechanisms, Financial self-regulation, Financial self-control systems, Device-level enforcement, Harm minimisation, Retail speculation","lastPublishedDoi":"10.21203/rs.3.rs-8432023/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8432023/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eOnline outcome markets spanning gambling platforms, prediction markets, sports-betting sites, crypto exchanges, and retail brokerages now form a fragmented ecosystem in which individuals can take leveraged positions on events ranging from minutes to decades. Existing harm-minimisation tools, such as deposit limits, self-exclusion, and platform-specific loss caps, operate in isolation and ignore cross-platform exposure and time structure of outstanding bets. We study a ruin-preventing mechanism for retail users: a cross-platform, time-aware guardian that aggregates speculative exposure across venues, tracks realised losses and time-discounted open risk, and restricts or modifies actions to keep probability of financial ruin below a prescribed threshold. The interaction between user and guardian is formalised in a discrete time model with heterogeneous contract maturities and tilt-prone behaviour, and we characterise a family of guardian policies that enforce behaviour-adjusted budgets on realised loss and time-weighted open risk. We also describe an implementable, device-level architecture that combines read-only connections to financial and platform services with local parsing of app and web interfaces on user's own devices, enabling cross-platform risk monitoring even when operators expose only coarse or adversarial interfaces. Guardian design is cast as a constrained mechanism-design and Stackelberg problem, in which a designer chooses loss and risk budgets, discounting, and behavioural-sensitivity parameters to maximise a stakeholder objective such as user utility subject to an ex-ante bound on ruin probability. 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