As I understand it, with CFDs one doesn't own an underlaying stock, but rather makes a gamble on wether its value would increase or decrease, thus taking the risk of losing even though the stock itself might do just fine in the long term.
How is that different from making bets on flipping a coin and why one form is allowed, while other is not?
One is something where you can make an informed decision as to which is more likely, up or down.
The other is completely random, heads or tails.
It is the same distinction between competitions and lotteries.
One is at least in part a game of skill. The other is a pure game of luck.