I think it is pretty clear that if John really wanted to raise the bet because he was confident he would win (#1 below) then he would follow through with it once Lou agreed to it. All the talk of "it's the last minute" and "too much time passed" is utter nonsense. If you were trying to win extra money because you thought you would win, you wouldn't be turning down that extra money at any point, even at the last second. It seems he was just trying to get in Lou's head by high rolling him and his bluff got called. Happens all the time.
John initially offered to raise the stakes. There are only four reasons for offering to raise the stakes in a gambling match.
1. You think you are the favorite, and want to increase the amount you will win. Known as "maximizing profit".
2. You think increasing the stakes or the threat thereof will have a negative psychological impact on your opponent and his game, thereby increasing your chances for winning. Also known as "gamesmanship" or "good strategy" depending on who you ask. Sometimes considered a form of "high rolling".
3. You are trying to impress others with how much "confidence" and "heart" you have, all while secretly having no intention whatsoever of raising the bet amount.
4. You don't want to play the match at all, likely because you feel your opponent is favored to win. You hope that by trying to raise the stakes your opponent will back down and refuse to play, allowing you to not only save money, but save face. Also known as "being scared" and considered to be a form of "high rolling".
We know we can rule out #1 because John didn't follow through with it.
John subsequently refused to raise the stakes once it was offered to him. There are only six reasons for not wanting to raise stakes in a gambling match.
A) You do not feel you are the favorite, and do not want to lose that much more money.
B) You feel you are the favorite, but not by enough to justify risking above a certain amount.
C) You are afraid that a bet of that size will have a negative psychological impact on you and cause you to play worse and lower your chances of winning. Known as being "smart" or "scared" depending on who you ask.
D) You are honoring the wishes of someone else, such as a significant other, to not play above a certain amount. Known as "I don't want to be in the doghouse". Also known as "considerate family man" or "whipped" depending on who you ask.
E) You simply do not have that amount of money and can't bet what you just don't have.
F) You technically do have that amount of money, but can't afford to lose it. You will never bet what you can't afford to lose, no matter how much the favorite, because you never know when lightning will strike, everything goes wrong, and the improbable (losing) happens. Known as "responsible" or "nit" depending on who you ask.
We can rule out D, E, and F because John already said he could bet more than the amount that Lou offered.
I personally see nothing wrong with someone not wanting to bet more than a certain amount no matter what their own personal reasons. However, its kind of crappy and makes one look dumb when they offer and even prod someone to raise the bet to a certain amount and then refuse to honor their own bet once the offer was accepted. No need for all that false chest puffing you weren't willing or able to back up.