Gambling in contests with heterogeneous loss constraints

•I study an asymmetric stochastic contest model.•Players differ in their ability to make debt.•The unique equilibrium outcome and payoffs are characterized in closed form.•A higher debt level of a player changes the bankruptcy risk of both players.•The similarity of the equilibrium to other contest models is explored.

I study the impact of asymmetric loss constraints on risk-taking behavior in the contest model of Seel and Strack (2013). I derive the unique Nash equilibrium outcome, the equilibrium payoffs and comparative statics about the bankruptcy risk.