Frontostriatal circuitry is implicated in the cognitive distortions associated with gambling behaviour. 'Near-miss' events, where unsuccessful outcomes are proximal to a jackpot win, recruit overlapping neural circuitry with actual monetary wins. Personal control over a gamble (e.g., via choice) is also known to increase confidence in one's chances of winning (the 'illusion of control'). Using psychophysiological interaction (PPI) analyses, we examined changes in functional connectivity as regular gamblers and non-gambling participants played a slot-machine game that delivered wins, near-misses and full-misses, and manipulated personal control. We focussed on connectivity with striatal seed regions, and associations with gambling severity, using voxel-wise regression. For the interaction term of near-misses (versus full-misses) by personal choice (participant-chosen versus computer-chosen), ventral striatal connectivity with the insula, bilaterally, was positively correlated with gambling severity. In addition, some effects for the contrast of wins compared to all non-wins were observed at an uncorrected (p < .001) threshold: there was an overall increase in connectivity between the striatal seeds and left orbitofrontal cortex and posterior insula, and a negative correlation for gambling severity with the connectivity between the right ventral striatal seed and left anterior cingulate cortex. These findings corroborate the 'non-categorical' nature of reward processing in gambling: near-misses and full-misses are objectively identical outcomes that are processed differentially. Ventral striatal connectivity with the insula correlated positively with gambling severity in the illusion of control contrast, which could be a risk factor for the cognitive distortions and loss-chasing that are characteristic of problem gambling.