The author was using the "pay 50k to win 1M at 1:400 odds" example to illustrate how the calculating the expected value (in a mathematical sense [1]) does not always result in the "most reasonable" decision. If I understood correctly, his point was that _even if_ the expected value (reward*probability - cost) is positive, it still might not make sense for the average person, because of the non-linear relationship between the money they have and the utility they will derive from it (i.e. the first dollar is more valuable to them than the millionth dollar).

The example doesn't support that point very well because the expected value of making that bet is negative, so the bet would not make sense even in the naive case, where all dollars have equal utility.

[1] https://en.wikipedia.org/wiki/Expected_value