This study aimed to explore how gambling involvement and gambling-related problems may be affected by significant life events, psychological co-morbidities and related social factors. Twenty recreational gamblers and 20 people experiencing gambling problems were interviewed, with reflective first-person accounts being analysed to develop a grounded theory. While both groups had experienced various significant life events and psychological co-morbidity, they coped with such events in different ways. The problem gambling group was found to increase their gambling involvement, unlike the recreational gambling group. In contrast to the problem gambling group, most recreational gamblers had strong social support networks and a resilience that helped them cope with significant life events and co-morbidities. A major finding of this study is the importance of resilience and social support when coping with adversity as protective factors against gambling problems. A grounded theory framework is presented as a basis for further research in this area.