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Similar to alcohol or drugs, legalisation can make things safer. As a bonus it can also open a new revenue stream for government through taxes.
Look at the legalisation of weed in some American states. Instead of a shady dealer you could go into a store. Instead of whatever they had at the time, you have known quality goods. Yes, there's a lot more nuance to it than that, but the general idea is that it takes away randomness/unknowns, and as a bonus: organised crime that would otherwise have been profiting from the industry lose out.*
For gambling the same kind of logic applies. People are going to be gambling anyway, so add in some legal frameworks that can make sure that things are more of a known value, and hopefully less likely to cause harm. Perfect example: you get stiffed on a win? If it's an off the books thing and you complain you'll probably end up with broken legs. If it's a legalised thing you could go to court or a regulatory body.