I think there's some confusion here as to what the utility function is defined over. And to be fair, the post itself is somewhat confused in this respect.
The argument that it might be more or less rational to gamble is an entirely different matter to whether it is more or less rational to smoke crack.
The shape of the utility function over money can make it more or less rational to accept particular money gambles: risk aversion is after all a property of the shape of the utility function.
The shape of the utility function over money cannot affect whether specific, non-risky choices about how to spend that money (e.g. whether to smoke crack) are more or less rational. If crack is you best option, that's already reflected in your utility function for money; if it's not, then that too, is already built in.
NB: This comment is not as precise as it should be in distinguishing decision-utility, experienced-utility etc. I think the fundamental point is right though.
The lottery came up in a recent comment, with the claim that the expected return is negative - and the implicit conclusion that it's irrational to play the lottery. So I will explain why this is not the case.
It's convenient to reason using units of equivalent value. Dollars, for instance. A utility function u(U) maps some bag of goods U (which might be dollars) into a value or ranking. In general, u(kn) / u(n) < k. This is because a utility function is (typically) defined in terms of marginal utility. The marginal utility to you of your first dollar is much greater than the marginal utility to you of your 1,000,000th dollar. It increases the possible actions available to you much more than your 1,000,000th dollar does.
Utility functions are sigmoidal. A serviceable utility function over one dimension might be u(U) = k * ([1 / (1 + e-U)] - .5). It's steep around U=0, and shallow for U >> 0 and U << 0.
Sounds like I'm making a dry, academic mathematical point, doesn't it? But it's not academic. It's crucial. Because neglecting this point leads us to make elementary errors such as asserting that it isn't rational to play the lottery or become addicted to crack cocaine.
For someone with $ << 0, the marginal utility of $5 to them is minimal. They're probably never going to get out of debt; someone has a lien on their income and it's going to be taken from them anyway; and if they're $5 richer it might mean they'll lose $4 in government benefits. It can be perfectly reasonable, in terms of expected utility, for them to play the lottery.
Not in terms of expected dollars. Dollars are the input to the utility function.
Rationally, you might expect that u(U) = 0 for all U < 0. Because you can always kill yourself. Once your life is so bad that you'd like to kill yourself, it could make perfect sense to play the lottery, if you thought that winning it would help. Or to take crack cocaine, if it gives you a few short intervals over the next year that are worth living.
Why is this important?
Because we look at poor folks playing the lottery, and taking crack cocaine, and we laugh at them and say, Those fools don't deserve our help if they're going to make such stupid decisions.
When in reality, some of them may be making <EDITED> much more rational decisions than we think. </EDITED>
If that doesn't give you a chill, you don't understand.
(I changed the penultimate line in response to numerous comments indicating that the commenters reserve the word "rational" for the unobtainable goal of perfect utility maximization. I note that such a definition defines itself into being irrational, since it is almost certainly not the best possible definition.)