If murder was legal we'd have a lot more of it. We still have them despite it being a crime, but nobody would ever suggest making it legal because some people do it anyway.
It’s hard to make an argument that making murder illegal was a net harm to society. It’s really easy to make that argument with vices, in fact any history book probably will in the section on prohibition.
Sports betting is not any more insidious than any other type of gambling. Even if legalizing it has increased the amount of sports betting, which likely it has, we don’t know that it has increased the overall amount of gambling, and we certainly don’t know that it has increased the overall amount of societal harm from gambling, no matter how many great anecdotes we get from newspaper articles.
Perhaps people have simply switched from the lottery or slot machines to sports betting. Perhaps some are better off because sports betting has a much lower house edge than the lottery or a lot of other forms of gambling.
I could tell you for sure there is a whole lot of illegal sports betting going on, or at least there was. There is a seedy black market that I would be willing to bet has been largely destroyed by the ability to Gamble from your phone. (I’m far too removed from it these days to have any firsthand knowledge of the current situation.)
I can also tell you about the negative impact that gambling laws have on the lives of non-problem gamblers, myself included.
People always reflexively follow the train of logic: vice bad, make vice illegal. It failed when we made alcohol illegal, the war on drugs has been disastrous for the poor, far worse than the drugs we were fighting, and there’s not much evidence to believe it even significantly reduced drug use. The idea that any vice being illegal creates an overall harm reduction has pretty much been shown time and time again to be incorrect, and yet everybody just believes it because it seems like common sense.
Sports betting is way too easy to use and thanks to the "skill" part it tricks people into thinking they have even more chances. Turns out those are chances to lose even more money.
Unlike your example of drug use, AFAIK there are no studies saying the same effect happens for sports betting, or even betting in general.
This for me is all pointless. We're arguing about something that does not improve society in any shape or form. The typical argument "we've been gambling since forever" doesn't cut it. We've also been murdering since forever, and both are still a net negative in society.
If we really need this silly vice, then lock it down. We can't allow this free-for-all where everything is sponsored by betting with money straight from the pockets of addicts, kids are getting addicted with loot boxes and the only ones that profit are the few middlemen that are morally corrupt enough to go into this business.