They would be. Both morally and legally.
But the OP’s scenario is that the borrower has no ability to pay back the big chunk of money he gambled and lost. If fatcat you loan your Ferrari to your penniless gardener so he can impress his friends and he wraps it around a tree he may well have an obligation to you. But not one he can ever fulfill.
We’re both members of the well-off brigade. It’s easy to forget that a horrifyingly vast percentage of Americans (~60%) cannot come up with $1,000 to meet an unexpected expense. What one can pay often overrules what one ought to pay.
See Most Americans can’t afford a $1,000 emergency expense, report finds - CBS News from early 2025. Trigger warning: The page begins with a big vid of the current criminal wannabe-dictator bloviating. It isn’t self-starting at least the way my browser is configured. But the article itself only mentions him in the sense of doing nothing about the problem to date except lip service and actions likely to make the problem worse, not better.