I see. I did miss the part about the $100 late fee. And you know what, I would still take option A because the expected loss is not meaningful to me, I don't intend to have this happen again. For one, I should not have been speeding or whatever and then compounded the problem by ignoring the punishment. I deserve that penalty and gambling it away is missing the point. In fact, I'd rather the money go to the local municipality than some casino's pocket. Or I would take another bet with better odds or payout :)
Then there is the other part.
You can't ignore utility. Heard of loss aversion before? How people prefer more risk when it is supposed to mitigate a loss? This is a textbook example of that psychological fallacy. Am I willing to risk a further $130 to avert my loss? No, not in this situation, considering my actions and the increased utility the money has to me as a poor college student. But phrased this way most people would take the risk!
I look at it this way. I am not willing to take an even odds bet of $130 that a coin will turn up heads, especially when I already owe $250. Are you? Most people are risk averse when the situation is phrased properly. If you are willing to take the bet then you derive less utility from the money and so are not applying the correct mental context of a cash strapped individual. Unless a poor appreciation of money is why this individual is cash strapped in the first place.
And finally, there is the fact that this could breed irresponsibility in many people. They do it once, win and a lesson is not learned. Increased likelihood of repeated behaviour and say the bet is lost the next time we have more money lost than if the bitterness of the fine had been instilled. They would have to do this enough times for the law of large numbers to kick in for them to approach their expected loss. Worse is if this becomes a general philosophy toward bills. Oversimplification of course but the point remains.