In my opinion, governments should only tax casinos and gamblers who win very large jackpots, but unfortunately, this isn't happening. Casinos and gamblers are taxed heavily. To make matters worse, governments haven't encouraged healthcare companies to train specialists who can quickly help gambling addicts. Now, regarding what governments do with taxes, unfortunately, many governments take taxes from citizens to use for their own purposes. As a result, the country doesn't develop as it should.
This is the exact reason why people stopped paying taxes in my country because the funds are not used for the development of the country, the law makers use these monies for their own personal interests. Taxes on gambling was almost implemented in my country but the law was disagreed by a lot of people, not every gambler or casino makes the same amount of money, so it wouldn't be fair for them to pay Taxes equally
We can all agree now that the government is selfish. If the government wants to legalise gambling, they should at least have a reasonable regulatory framework that will be favourable to the casinos, the rich gamblers and the poor gamblers as well. The regulation should also address how disputes will be resolved between any of these parties. But unfortunately, the government is only interested in taxes and fines. It seems that they are usually happy when the gamblers or casinos default because that would be another opportunity to make money.
They shouldn't just take money from people, let these people see why they are paying these monies. This is why with the introduction of online gambling and crypto casinos, many would rather gamble in secret than pay taxes to the government.