It's not killing it, from around the world, there are still so many gamblers who are utilizing Bitcoin and other cryptocurrency for their daily gambling activities, while there are also many other players too that love playing with stable coins. If research is conducted on this, I am assuming that crypto gamblers will be much higher than the numbers of players using stable coins, the reason is because many people that preferred Fiat are using centralized local casinos to gamble but for the many of them using the only crypto casinos, they are betting with crypto.
Moreover, stablecoin is a different version of cryptocurrency, so it also falls under crypto. So I don't think this is harming the crypto edge and besides, we don't have to go to a separate bank to open an account to use stable cryptocurrency.
We can only gamble here if we have stablecoins in our wallet, and besides stablecoins, there are many other cryptocurrencies such as TRX, Litecoin, etc. We use these because they have lower transaction fees or withdrawal fees. And the main issue here is gambling. I don't think there is any different role for stable currency or the volatile one.