Agree on under-reported. But what externalities?
Having a gambling addict in your life can be just as destructive if not more destructive as having a drug addict in your life.
This is something that most people don't currently understand because most people don't really have much experience with gambling addicts and the sort of horrible things they will do to satisfy their cravings, but as the amount of gamblers in society grows explosively, we're all going to be feeling the effects of being surrounded by these people.
More gambling addicts in gutters.
Addiction. Misappropriation of others' secrets. Perverse incentives.