Gambling transactions offer the possibility of either a loss or a gain. Gambling creates losers and winners. Insurance transactions do not present the possibility of gain. Insurance offers financial support sufficient to replace loss, not to create pure gain.

Gamblers can continue spending, buying more risk than they can afford to pay for. Insurance buyers can only spend up to the limit of what carriers will accept to insure; their loss is limited to the amount of the premium.

Gambling can create losses that go so far as to damage a gambler's finances. Gambling can hurt people. Insurance reduces financial burdens that can otherwise hurt individuals beyond their point of recovery. Insurance provides money to insured people in need when their need is greatest, i.e. after a loss.

Gambling, creating losers and winners, offers no support to losers. Family and society as a whole can thus be brought down to a slightly lower average financial level. Insurance payouts are beneficial to society at large as well as to the individual receiving the benefit directly, since there is no new category created of losers. When an insured loss occurs, money is provided to rebuild what already once existed, or to compensate financially for an irreversible loss.

Gambling redistributes money without regard to recipients' ability or responsibility. Gambing creates both losers and winners without regard to the winners' handling of money. Insurance gives money to those who have already achieved the level of financial responsibility to be able to pay premiums and the foresight to avoid the consequences of large losses.

Gambling increases risk. It creates new risks that do not need to exist. Insurance takes existing risk into a transaction enabling an insured to reduce large risk that can not otherwise be avoided.

Gamblers create a risk that may have no link whatsoever to their personal and family situation. Insurance buyers must have an insurable interest in the insurance transaction. Insurance transactions are built around an exogenous relationship, usually economic or familial.

Gamblers, by creating new risk transfer without regard to existing risk, are risk seekers. Insurance buyers are risk avoiders, creating risk transfer in terms of their need to reduce exposure to large losses.

Gambling or gaming is designed at the start so that the odds are not affected by the players (their conduct or behavior). However, to obtain certain types of insurance, such as fire insurance, policyholders can be required to conduct risk mitigation practices, such as installing sprinklers and using fireproof building materials to reduce the odds of loss to fire. In addition, after a proven loss, insurers specialize in providing rehabilitation to minimize the total loss.

Historically, gambling has been considered an uninsurable risk. Recent developments, however, have led to the invention and patenting of new types of insurance to protect against gambling losses. An example is United States Patent 6,869,362, "Method and apparatus for providing insurance policies for gambling losses."

Insurance, the avoiding, mitigating and transferring of risk, creates greater predictability for individuals and organizations. Insurance enables risk to be handled intelligently to achieve stability and growth.

Reference: www.wikipedia.org