[rdl]

If you had a machine which would charge $1 for a 1% chance of winning $1000 in 1 year, you could fairly charge people somewhere between $5 and $9.50 per pull of the handle. You'd have an exceptionally long line waiting for that deal.

The whole point is rich people, investment portfolios, etc. have an entirely different risk profile than individuals. For an individual, low-probability high EV (high variance) is dangerous, which is why you buy insurance -- essentially negative EV (a 100% chance of losing either $1 or $2, but not losing your $1000).