What is happening is that Congress and the rest of the of the government thinks that the General Welfare clause extends to any and all moral causes they can justify.

That is why the 18th was passed way back when and why the Fed is involved in Abortion, Gay Marriage, the War on everything, etc.

What we need is the Fed to get back to the Enumerated Powers.

Broken windows fallacy. Everything has an opportunity cost - all those alternatives not taken. If you spend money on a broken window, you're not spending money on new shoes for the kids. Gambling has a particularly high opportunity cost, because it is not even a slightly productive enterprise. It is pure wealth-transfer from one party to another. A true zero-sum game. It's not an industry, it's economic wheel spinning. If you gamble that money away, you're not spending it on anything at all. And the person who wins it also has not produced anything in the process.

You might as well tape some stacks of $100 bills to an old record player sitting between two people, turn it on, and then claim that you're generating millions of dollars in business because money has gone back and forth a bunch of times. When really all you're doing is wasting time and electricity.

"But that's the nature of entertainment! It's all a waste of time! We can't be producers 24/7! People need some time to relax!"

That's no excuse. Even artistic entertainments at least add to the library of human accomplishments. For example, money spent on movies results in the production of... movies, which can potentially keep spinning off value for generations, long after the initial investment has been recouped. Sure, there will be a lot of forgettable dross that will be lost to the ages, but some small percentage will endure. That's actual production of a durable good. If a few people go out and see a movie instead of staying home gambling online, the world as a whole becomes slightly richer. Maybe that small movie that becomes a classic gets made, when it otherwise wouldn't have. Even if it's only 1 out of 100 movies, that's better than wasting time and exchanging money for nothing of lasting value, which is all you get from gambling.

And movies are far from the most productive use of capital. If you stay in, read a classic novel for entertainment (leveraging the durable goods of the past) and leave your money in the bank where it can be loaned out to someone building a factory to make a new drug, or a new computer, or something else that advances the state of the art in some way, you're really improving humanity's lot.

So while I'm generally opposed to government regulation, if you're going to ban anything, gambling is a good place to start. It's not hard to find a better opportunity than one that produces nothing at all.