The difference is whether or not this scenario can happen: you put in some money, get out much more than you put in, and end up far better off than you were before.
With insurance, only the first two parts can happen. The third part can't happen, because the second part only happens to compensate you for a loss. When gambling, all three can happen. Of course, on average it won't, but it's possible to put in a dollar and get out a million dollars with no losses besides the dollar and a little bit of time.
It is sometimes possible to arrange all three with constructs we call "insurance," like taking out a life insurance policy on someone you don't like, but my argument is that this is where we start to see insurance as "wrong" too.
With insurance, only the first two parts can happen. The third part can't happen, because the second part only happens to compensate you for a loss. When gambling, all three can happen. Of course, on average it won't, but it's possible to put in a dollar and get out a million dollars with no losses besides the dollar and a little bit of time.
It is sometimes possible to arrange all three with constructs we call "insurance," like taking out a life insurance policy on someone you don't like, but my argument is that this is where we start to see insurance as "wrong" too.