Traditionally, gambling Elites in HU isn't allowed since Uniques and Sets for those items were very strong (game-breaking strong for most of the level 95s).
The current odds are roughly 5% chance per character level higher than the item level that an item is upgraded to Exceptional. For example, chararacters above level 60 are nearly guaranteed to gamble an Exceptional Cap (WarHat, level 40) rather than the Basic or Elite versions. The formula's reliance on the difference between character level and item level is hardcoded and makes subtle changes hard (it boils down to "Do always want Basics, Exceptionals, or Elites?"). The odds could be changed across difficulties though, if the community feels like changing tradition.