No nation on earth, including the United States, understands the role of government to work in the way you do. In the American tradition, regulations of activities like gambling are substantially older than the Republic. The states and cities have and have always had broad authority on matters of health, welfare, safety, and morals (this is called the police power). Today, they exercise that power on matters spanning guns, cars, pollution, and vaccines. That power includes, and has always included, the regulation and prohibition of gambling. The reason for this is that the division you're drawing is totally meaningless. There are no harmful practices that only harm the person engaging in them. Gambling has all sorts of measurable knock-on social effects — there's a robust literature on the effects of legalizing sports gambling that speaks to this. The public interest is served by limiting these effects, and the most efficient way to limit them often is prohibition.