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PhilGoetz comments on On dollars, utility, and crack cocaine - Less Wrong
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Roulette doesn't give a big enough payoff to move you up into the steep area of your utility function, so it doesn't get the "a dollar won is worth more than a dollar spent" effect.
It would also be a plausible conjecture that, if someone's utility function is sigmoid, and they're on the low end of it, their model of their utility function is an exponential. That would enhance the effect.
Re: Roulette doesn't give a big enough payoff [...]
Bet twice consecutively, then. Roulette's payoffs are flexible enough to give you practically any odds you desire.
...and what about the diminishing utility of money? Often you don't want to trade odds for cash.
Just bet 5 times in a row. Still better odds than the lottery.
One problem with that is that, if you've won at roulette a few times in a row, you're now going to be risking quite a lot if you bet it all again. You'll actually end up badly regretting your actions in a lot of cases.
True.
<EDIT> Actually, I don't know if it's true. But it sounds plausible. </EDIT>