Question:
Why is there a ritual way of slaughtering and preparing all kosher animals except for fish?
Answer:
When the Jews were in the desert and started complaining about the lack of meat, Moses turned to G‑d saying, “If sheep and cattle were slaughtered for them, would it suffice for them? If all the fish of the sea were gathered for them, would it suffice for them?”1
From the fact that the verse specifies slaughter in reference to sheep and cattle, but gathering in reference to fish, we learn that it is enough to simply gather fish out of water without slaughtering them.2
However, the question remains. What is the reason that fish are treated differently than other animals?
A somewhat cryptic Talmudic passage seems to address this question:
A Galilean lecturer expounded: Cattle were created out of the dry earth, and are rendered kosher by the severing of both organs [of the neck]; fish were created out of the water, and are rendered fit without any ritual slaughtering; birds were created out of mud3 and are therefore rendered fit by the cutting of just one organ.4
There are a number of explanations for this fascinating piece of Talmud. Here is one of them:
In Jewish teachings, as well as in ancient philosophy, all of creation is divided into four elemental categories: fire, air, water and earth.5 The earth is considered to be the lowest of the elements. Then comes water, which is more refined; followed by air, which hovers above the water; and finally fire, which constantly strives to reach higher.
The Talmud seems to be saying that the kosher requirements depend on how an animal was created. Cattle (and to a lesser degree birds) were created from the “earth,” and therefore require slaughter. Fish were created from the more elevated element of “water,” and therefore don’t require any type of slaughter.
A mystical explanation
The great Kabbalist Rabbi Isaac Luria (the Ari, 1534–1572) taught that every creation possesses a “spark” of divine energy that constitutes its essence and soul. When a person utilizes something toward a G‑dly end, he or she releases this divine spark, realizing the purpose for which it was created. Thus, one who makes a blessing, eats, and then uses the energy from the food to perform a mitzvah elevates the spark of divinity that is the essence of the food.6
But some divine sparks are harder to get to than others. Because cattle were created from earth—which is considered the coarsest of the elements—they require more preparation to be elevated, and must be slaughtered according to Jewish ritual. Fish, on the other hand, were created from the more refined element of water. Therefore, merely gathering them (drawing them out of the water) suffices, and all one needs to do in order to elevate the G‑dly spark in fish is to make a blessing, and then use the energy from what you have eaten for G‑dly pursuits.7

Why are we allowed to let the fish suffer to death once we take it out of the water and aren’t told to kill it right away? Please explain how this is not cruelty to animals?
I have been asked this by a few different folk. I have been asked to kill the fish right away and not let it suffer. A great fisherman I knew used to club the fish over the head and dispatch of them cleanly, so they would not struggle, and they would be easily captured. One day, I caught a fish and did not kill it, but put it in my bag. I swam with the fish in my bag for a couple of hours then I let it go. It swam away in a sure and determined direction. I let it go so it could survive. After hours in the bag, the fish survived and lived. If I had killed it right away, it would not have lived.