Examples of application fees where you pay a fee without any guarantee of acceptance off the top of my head are college applications and applications for renting an apartment. I'm sure there are others.

Sure, as an individual you can often cash out an "investment" but this is not the case for a business. If you invest in developing and/or producing a product and no one buys it you can't just "cash out".

Point taken about "gambling" being more descriptive of the effect, I don't necessarily disagree.