Before it was legal, most people's experiences with sports betting were small wagers between friends. Maybe a few large bets that they'll still talk about to this day. Gambling with friends or even just coworkers comes with natural limits: the size of one's bets is limited by others' aversions to risk, compulsive gambling is easily spotted, and the players' winnings/losings are zero sum.
Yes, there were illegal bookies before legalization, and they had all the problems of legalized gambling plus more. But the law-abiding (or at least casually law-breaking) majority of voters didn't think increasing the prevalence of sports gambling would hurt. Not too mention all the revenue promises (more benefits, cuts to other taxes). It's no surprise legalization was politically popular.
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Yeah, making a small "fun" bet on a game is a way to make it more interesting. I've done it a few times and it really does. I'm talking maybe $20 though, I am far too frugal to put any real money at risk on a bet. I don't go to casinos for the same reason, I'd play a few hands or put maybe $20 into a slot machine and then I'd really start thinking about how I'm flushing my money down the toilet and I'd stop having fun.
My mother in law loves it, she will go to the casino and come home up $1,000 or down $1,000 and it's all just entertainment to her. She loses probably a steady 5% on average, which is exactly what the casinos want.