So it’s a bit cooked but basically humans do stuff that’s harmful, governments supplying it at least removes profit incentives.

You can’t ban gambling out of existence but a government body can be set up in such a way that odds are fairer, only less addicting games are offered (e.g. no pokies because flashing lights and sounds are satanic), the rooms have natural light and clocks etc. Any money made goes into gambling assistance programs or community improvement or whatever.

Would people still get hurt? yes. Would there be corruption? yes. But there’s no way it can be worse than private operations which still have all the same problems with less transparency and being harder to regulate, plus the profit incentive.