This is all about taxes. West Virginia has a huge gambling casino that the state profits from. So they are not really concerned about hard working Americans getting harmed by gambling. Those are just typical scare tactics. They have to scare you to get you to agree to give up some of your freedoms so that can pretend that they are protecting you.
Most likely they want to legalize their income To avoid punishment. Only the fact is that they will lose much less than the Bitcoin user.