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It's possible to find pleasure in the suffering of others - in this context not huge suffering so no need to be guilty over enjoying it.

As to lose/lose bets, one advantage is minimal cost. If I bet someone £1 then sure I might win a pound, but I also might lose a pound. If I bet someone an embarrassing act, I'm not risking any money. (Not just the case with money, but the point is that for the winner of the bet to get a net gain it means the loser has a tangible loss, whereas doing something embarrassing you aren't really losing anything.)

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