In as much as I validate what you're saying in some way since I believe people learn better when they've hit a rock and made to sufferin order to right their wrongs, but in the case of OP, I think he and the others did the best thing and I would tell you why. We live in different countries and matters are handled differently. In your country, there might be things like social services which comes to people's aids, and when such matters are reported to the police, the guy is compelled to pay back the money within a timeframe and he goes back home unhurt. He might be arrested and the government takes care of his family until he returns.
Another question arises: if you, as a person who knows the specifics of behavior with people who have debt, what can happen to them, why, in this case, has the player himself neglected everything? After all, he must also understand that it is impossible to win all the games, just as it is impossible to know the outcome of the game in advance. But despite this, he played. And here the question is about his attitude toward his family, health, and all the consequences of losing. He did not care, and the only thing that drove him was a passion for the game and greed.
How to teach such people?
When I wrote about losing cards, I had in mind exactly these consequences: in my country, it is not the police who will knock out debts, but people from another sphere. But when sitting at the gaming table, a person always chooses what is important to him—money or family—and how to behave in case of loss.