Yes, gamblers who are much addicted will take it as an opportunity and spend good on gambling without thinking about the losses. Maybe it requires certain restricted framework, terms and conditions so that it could limit them. Everything has got advantage and disadvantage. Maybe this can help the family that is behind the person who has lost all through gambling.
I think that is what the insurance company think and they will need to pay big money to the gamblers who are already losing too much money. But I guess that the insurance company will not easily give the money to the gamblers, and they will investigate why the gamblers can spend too much money on gambling. If the gambler uses it to get their money from the insurance money, they will not agree to give the money to them. Maybe there will need more discussion between the insurance company and the casino and maybe they can invite the gamblers to join in that discussion.