diff --git a/server/src/engine/payment-edge.test.ts b/server/src/engine/payment-edge.test.ts
new file mode 100644
index 0000000..a0101a2
--- /dev/null
+++ b/server/src/engine/payment-edge.test.ts
@@ -0,0 +1,188 @@
+import { describe, it, expect, beforeEach } from 'vitest'
+import {
+  placeBet,
+  settleBets,
+  getFightBets,
+  clearEscrow,
+  getPoolInfo,
+} from './betting.js'
+import { validateBet, calculateOdds, calculatePayout } from './odds.js'
+
+beforeEach(() => {
+  clearEscrow()
+})
+
+describe('7.3 — simultaneous bets on same fight', () => {
+  it('two concurrent bets on same fight: both accepted into escrow', async () => {
+    const fightId = 'fight-sim-1'
+    const [bet1, bet2] = await Promise.all([
+      placeBet(fightId, 'pub1', 'botA', 500, 'cashuA_test_500', 1200, 1200, 'botA'),
+      placeBet(fightId, 'pub2', 'botB', 300, 'cashuA_test_300', 1200, 1200, 'botA'),
+    ])
+
+    expect(bet1.fightId).toBe(fightId)
+    expect(bet2.fightId).toBe(fightId)
+
+    const bets = getFightBets(fightId)
+    expect(bets).toHaveLength(2)
+
+    const pool = getPoolInfo(fightId)!
+    expect(pool.totalPool).toBe(800) // 500 + 300
+    expect(pool.betCount).toBe(2)
+  })
+
+  it('settlement distributes correctly with multiple bets', async () => {
+    const fightId = 'fight-sim-2'
+    // Bet 1: pub1 bets on botA (winner)
+    await placeBet(fightId, 'pub1', 'botA', 1000, 'cashuA_test_1000', 1200, 1200, 'botA')
+    // Bet 2: pub2 bets on botB (loser)
+    await placeBet(fightId, 'pub2', 'botB', 500, 'cashuA_test_500', 1200, 1200, 'botA')
+
+    const settlements = await settleBets(fightId, 'botA')
+    expect(settlements).toHaveLength(2)
+
+    const winner = settlements.find(s => s.won)!
+    const loser = settlements.find(s => !s.won)!
+
+    expect(winner.payoutSats).toBeGreaterThan(0)
+    expect(winner.payoutToken).toBeTruthy()
+    expect(loser.payoutSats).toBe(0)
+    expect(loser.payoutToken).toBeNull()
+  })
+})
+
+describe('7.3 — fight cancelled/draw: bet refund', () => {
+  it('draw settlement refunds all bets', async () => {
+    const fightId = 'fight-draw-1'
+    await placeBet(fightId, 'pub1', 'botA', 1000, 'cashuA_test_1000', 1200, 1200, 'botA')
+    await placeBet(fightId, 'pub2', 'botB', 500, 'cashuA_test_500', 1200, 1200, 'botA')
+
+    // Draw: winnerId = null → all bets refunded
+    const settlements = await settleBets(fightId, null)
+    expect(settlements).toHaveLength(2)
+
+    for (const s of settlements) {
+      expect(s.won).toBe(false)
+      // Refund amount equals original bet amount
+      expect(s.payoutSats).toBeGreaterThan(0) // refund, not zero
+      expect(s.payoutToken).toBeTruthy() // minted refund token
+    }
+
+    // Verify bet 1 refunded correct amount
+    const bet1Settlement = settlements.find(s => s.payoutSats === 1000)
+    expect(bet1Settlement).toBeDefined()
+
+    // Escrow cleared after settlement
+    expect(getFightBets(fightId)).toHaveLength(0)
+  })
+
+  it('clearEscrow returns count of orphaned fight pools', async () => {
+    await placeBet('fight-a', 'pub1', 'botA', 500, 'cashuA_test', 1200, 1200, 'botA')
+    await placeBet('fight-b', 'pub2', 'botB', 300, 'cashuA_test', 1200, 1200, 'botA')
+
+    const cleared = clearEscrow()
+    expect(cleared).toBe(2)
+
+    // All pools gone
+    expect(getFightBets('fight-a')).toHaveLength(0)
+    expect(getFightBets('fight-b')).toHaveLength(0)
+  })
+
+  it('settlement on empty fight returns empty array', async () => {
+    const settlements = await settleBets('nonexistent-fight', 'botA')
+    expect(settlements).toEqual([])
+  })
+})
+
+describe('7.3 — bet validation edge cases', () => {
+  it('rejects zero-sat bet', () => {
+    const result = validateBet(0)
+    expect(result.valid).toBe(false)
+    expect(result.error).toBeDefined()
+  })
+
+  it('rejects negative bet', () => {
+    const result = validateBet(-100)
+    expect(result.valid).toBe(false)
+  })
+
+  it('rejects bet above maximum (100k sats)', () => {
+    const result = validateBet(100_001)
+    expect(result.valid).toBe(false)
+  })
+
+  it('accepts minimum valid bet (100 sats)', () => {
+    const result = validateBet(100)
+    expect(result.valid).toBe(true)
+  })
+
+  it('accepts maximum valid bet (100k sats)', () => {
+    const result = validateBet(100_000)
+    expect(result.valid).toBe(true)
+  })
+})
+
+describe('7.3 — odds at extreme ELO gaps', () => {
+  it('odds remain finite and positive at huge ELO gap', () => {
+    const odds = calculateOdds(3000, 100)
+    expect(odds.botAPayoutMultiplier).toBeGreaterThan(0)
+    expect(odds.botBPayoutMultiplier).toBeGreaterThan(0)
+    expect(isFinite(odds.botAPayoutMultiplier)).toBe(true)
+    expect(isFinite(odds.botBPayoutMultiplier)).toBe(true)
+    // Favorite should have lower payout multiplier
+    expect(odds.botAPayoutMultiplier).toBeLessThan(odds.botBPayoutMultiplier)
+  })
+
+  it('equal ELO produces near-even odds', () => {
+    const odds = calculateOdds(1200, 1200)
+    // Should be ~2.0x for both (minus house edge)
+    expect(odds.botAPayoutMultiplier).toBeCloseTo(odds.botBPayoutMultiplier, 1)
+  })
+
+  it('payout calculation is correct', () => {
+    const payout = calculatePayout(1000, 2.5)
+    expect(payout).toBe(2500)
+  })
+})
+
+describe('7.3 — Cashu token validation', () => {
+  it('placeBet rejects empty token', async () => {
+    await expect(
+      placeBet('fight-1', 'pub1', 'botA', 500, '', 1200, 1200, 'botA')
+    ).rejects.toThrow(/Invalid.*Cashu/i)
+  })
+
+  it('placeBet rejects too-short token', async () => {
+    await expect(
+      placeBet('fight-1', 'pub1', 'botA', 500, 'short', 1200, 1200, 'botA')
+    ).rejects.toThrow(/Invalid.*Cashu/i)
+  })
+
+  it('placeBet accepts valid cashuA-prefixed token', async () => {
+    const bet = await placeBet('fight-1', 'pub1', 'botA', 500, 'cashuA_valid_token_test', 1200, 1200, 'botA')
+    expect(bet.id).toBeTruthy()
+    expect(bet.amountSats).toBe(500)
+  })
+})
+
+describe('7.3 — wallet persistence (no server interaction)', () => {
+  it('escrow survives multiple bet/settle cycles without leaks', async () => {
+    // Cycle 1
+    await placeBet('f1', 'pub1', 'botA', 500, 'cashuA_test', 1200, 1200, 'botA')
+    await settleBets('f1', 'botA')
+    expect(getPoolInfo('f1')).toBeNull()
+
+    // Cycle 2
+    await placeBet('f2', 'pub1', 'botA', 300, 'cashuA_test', 1200, 1200, 'botA')
+    await settleBets('f2', null) // draw refund
+    expect(getPoolInfo('f2')).toBeNull()
+
+    // Cycle 3
+    await placeBet('f3', 'pub1', 'botA', 200, 'cashuA_test', 1200, 1200, 'botA')
+    await settleBets('f3', 'botB') // loss
+    expect(getPoolInfo('f3')).toBeNull()
+
+    // No orphaned escrow
+    expect(clearEscrow()).toBe(0)
+  })
+})